PRIVATE BUSINESS

Transas Group Bill (By Order)

Order for Second Reading read.
	To be read a Second time on Wednesday 26 February.

Oral Answers to Questions

WALES

The Secretary of State was asked—

Economic Development (South-west Wales)

Martin Caton: What recent discussions he has had with the First Minister in the National Assembly about economic development potential in south-west Wales.

Peter Hain: I have regular discussions with the First Minister about economic development, which is particularly helped by objective 1 funding, under which 187 projects in south-west Wales have been approved so far, attracting £66 million of grants.

Martin Caton: I thank my right hon. Friend for that reply. Will he join me in welcoming the formation of the Gorseinon community development trust, a local vehicle for creating jobs in a community that has recently been hard hit by works closures? Will he use his best endeavours to effect the trust's proposals for an enterprise village on the old Corus Bryngwyn works in Gorseinon?

Peter Hain: I welcome both proposals. There is a genuine prospect of creating world-class facilities throughout south-west Wales. They include the excellent and exciting tourist facility of Bluestone in Pembrokeshire. I hope that Pembrokeshire coast national park and Pembrokeshire county council will speed through the application as quickly as possible.

Lembit �pik: The Secretary of State knows that the KTH plant in Llanidloes is threatened with closure. If it closed and 250 jobs went, the economic impact on a town of only a couple of thousand residents would be as serious as the difficulties in south-west Wales. Will the right hon. Gentleman therefore be willing to accept a representation from the town taskforce, which is trying to ensure that we do not lose the jobs or that they are replaced if we encounter problems with KTH?

Peter Hain: I will certainly be happy to meet a delegation, and I am sure that the hon. Gentleman will be in attendance. I am worried about the development because I appreciate that KTH is a vital local employer in Llanidloes. The First Minister has asked Team Wales to investigate the possibility of saving jobs and maintaining that vital facility.

Denzil Davies: My right hon. Friend will be well aware of the proposals to develop further the motor racing circuit at Pembrey and the adjoining airport. When he meets the First Minister, will he press him to ensure that the necessary infrastructure funds are available for two projects that will give the economy of south-west Wales an enormous boost?

Peter Hain: My right hon. Friend is right. I have had the privilege of racingnot very quicklyon Pembrey motor racing circuit in a car sponsored by the Welsh Development Agency. The projects for the circuit and the airfield constitute an exciting prospect and they need support. I shall do everything possible to help. I have already discussed the matter with the Minister for Economic Development, who is also keen on the projects.

Nigel Evans: The manufacturing sector is hardest hit in south-west Wales. To name only one company, Dewhirst closed three factories with the loss of 900 jobs and moved production to Morocco. Why does the Secretary of State believe that manufacturing confidence is so low and declining in Wales? Is it because of the climate change levy, the landfill tax increases, the fuel tax rises, the working time directive, the business rate rises, the huge increase in red tape, massive extra costs to business to operate the benefits system through the payroll or the extra jobs tax that will hit industry in April and siphon millions of pounds into Government coffers that should be invested in business?

Peter Hain: I find the hon. Gentleman's concern for manufacturing in Wales very touching given that the Tories massacred the sector in the 1980s and early 1990s. As I understand it, most Dewhirst workers have been able to get new jobs or are in the process of finding them. Yes, manufacturers have had a tough time, principally because of the high pound, but we are doing all that we can to support them. There is much good news about new investment by manufacturers in Wales and employment in Wales. Unemployment fell to 5.2 per cent. in December. That is great news because it brings Wales to the same level as the rest of the United Kingdom. Instead of lagging behind, we have lower unemployment than the United States of America, Canada, Belgium, Finland, France, Germany, Italy, Portugal and Spain.

Nigel Evans: The Secretary of State took his eye off the ball at the Convention on the Future of Europe and was clearly outflanked. I do not want him to do that for manufacturing jobs in south-west Wales. He knows that the Confederation of British Industry in Wales has already said that there are problems with the dualling of roads, congestion on the M4 and the trains between Cardiff and west Wales. Time and again, I have mentioned the potential to boost investment in Swansea and west Wales that Swansea airport offers. Will the Secretary of State hold talks with his colleagues and business leaders in Wales to ascertain what can be done to remove the barriers to economic growth in south-west Wales to attract more jobs there?

Peter Hain: Not only will I meet business leaders in Wales; I met the director of CBI Wales on Monday, and the director general of the Institute of Directors yesterday. They fully support our strategy to develop a world-class economy in Wales. Rather than continually kicking Welsh businesses in the teeth, as the hon. Gentleman does, and continually running Wales down, they remember that the Tories massacred about 1 million manufacturing jobs when they were in power. We are supporting manufacturing. The Welsh economy is on the up. The hon. Gentleman should be praising it, not kicking it.

Jackie Lawrence: My right hon. Friend will know of two major developments of national importance in west Wales that affect my constituency. He just mentioned one, the Bluestone project; the other is the Petroplus plan for a liquefied natural gas importation terminal, for which Pembrokeshire county council granted consent yesterday. Will my right hon. Friend also support that project, and do everything possible to ensure that the high-pressure gas pipeline is extended down to Pembrokeshire so that the project is not put at risk?

Peter Hain: I have met Petroplus representatives, and my hon. Friend the Under-Secretary of State did so yesterday. The project in Milford Haven is very exciting: it will put Pembrokeshire at the forefront of energy supply. We will do all that we can to support it, and given my hon. Friend's additional support the future looks very bright.

Roy Beggs: Does the Secretary of State agree that Government policyand indeed, the efforts of the Welsh Development Agencycontribute to the success of economic development in Wales? Might it not be of benefit for regional development agencies to come together to share experience and expertise, and avoid unnecessary competition?

Peter Hain: I certainly agree with the hon. Gentleman.

Air Transport

John Smith: What assessment he has made of the future of air transport in Wales.

Peter Hain: Air transport is important to the economy of Wales and has a good future. The Department for Transport and the National Assembly are currently consulting on an air transport strategy for Wales.

John Smith: My right hon. Friend will know of the excellent document produced by the Welsh Affairs Committee under the guidance and leadership of my hon. Friend the Member for Clwyd, South (Mr. Jones). It demonstrates that air transport depends on the continued success of Cardiff international airport. It also points out that if the success created by the involvement of bmibaby is to be built on, road access must be improved, and the existing road to the airport must be upgraded immediately. Will my right hon. Friend assure me that he will meet his counterpart in the National Assembly, and get the road upgraded as a matter of urgency?

Peter Hain: I agree that the report is excellent. The Welsh Affairs Committee does produce excellent reportsprovided that it does not criticise the Secretary of State, of course!
	Cardiff airport is now the fastest-growing regional airport in Britain. It was used by 1.5 million passengers last year, and the number is forecast to rise to 3.5 million over the coming years. Yes, the road link is crucial. When I was the Minister responsible for transport in Wales between 1997 and 1999, I tried to do something about it. I will now do all that I can to support my hon. Friend's enthusiasm, and I will receive any representations he wishes to make and any delegations he wishes to bring.

Elfyn Llwyd: The right hon. Gentleman will know of the threat to 160 jobs at the airfield in Llanbedwr, in my constituency. An American aeronautical company is interested in taking the airfield over lock, stock and barrel. Will the right hon. Gentleman please liaise with the First Minister and other Cabinet colleagues to ensure that the company is given all possible assistance, so that jobs can be saved and the area rejuvenated?

Peter Hain: I should be delighted to do that. I assure the hon. Gentleman that I will do all that I can. If he wishes to make any further representations to me, we can work together in achieving that objective.

Albert Owen: My hon. Friend the Member for Vale of Glamorgan (Mr. Smith) referred to the Welsh Affairs Committee's report, Transport in Wales, which recommends that a north-south link be established as soon as possible. Does my right hon. Friend agree that RAF Valley, which is in my constituency, is well placed to be the principal link, considering its existing infrastructure and technology, thereby linking the mother of Wales with the capital of Wales? Will he press his Cabinet colleagues and his colleagues in Cardiff to ensure that subsidies are discussed, and that the issue is included in the White Paper that my right hon. Friend the Minister with responsibility for transport will produce?

Peter Hain: Yes, I will certainly do all of those things. I had the advantage of visiting my hon. Friend's constituency with him a few months ago. I became very aware of the excellent facility provided by RAF Valley, which could be a springboard for vital north-south air links. I hope that the Welsh Assembly Government will take this forward, and I shall certainly support it in every way that I can. We need speedy and efficient air links between north and south Wales, and, indeed, between other regions of Wales. Swansea airport, which the hon. Member for Ribble Valley (Mr. Evans) mentionedI know that he has been a big supporter of itshould be included in that.

Nigel Evans: I am grateful to the Secretary of State for his comments, and I should like to add my support to RAF Valley and its commercial use. However, British Airways has treated the people of Cardiff and Wales rather shabbily through its recent announcement that it is about to withdraw. Frankly, its announcement that the people of Wales can still fly BA as long as they travel from Bristol or Birmingham is a disgrace, and an insult to them. Will the Secretary of State congratulate Air Wales and bmibaby, which has announced that it will increase the number routes that it flies, and apparently is considering several other routes as well? Will he meet Tony Davies of bmibaby and Roy Thomas of Air Wales to establish the potential for those companies' providing the routes that BA has withdrawn from, and to establish whether other possibilities exist to ensure that Cardiff airportfor goodness sake, it is the regional airport of Walesgets the support that it desperately needs?

Peter Hain: I agree with all of the points that the hon. Gentleman makes, and I should be happy to receive any such delegations. I had the advantage of visiting Cardiff heliport, which is an excellent facility and is probably the best heliport in Europe. I learned of its plan, in discussion with British Airways, to provide a shuttle service to Heathrow and to Gatwick. If we can get that off the ground, so that passengers can check in at Cardiff heliport and go straight through to Heathrow or Gatwick, that will be a marvellous facility. BA's withdrawal from Cardiff was very sad; however, bmibaby is doing a great job in filling the gap.

Win Griffiths: Given the plan to open a passenger service from Bridgend to Barry and Cardiff through the Vale of Glamorgan, which will pass within spitting distance of Cardiff international airport, will my right hon. Friend meet the Strategic Rail Authority to persuade it to invest in extra track to enable an excellent rail link to the airport?

Peter Hain: I should be happy to do that. As my hon. Friend knows, a start will be made later this year through a new link between Cardiff central station and Rhoose airport, which will serve Cardiff airport. If we can link it with Bridgend, that would be even better.

CAP Reform

Anne McIntosh: What recent discussions he has had with the First Secretary on the impact of reforms of the common agricultural policy on Wales.

Don Touhig: My right hon. Friend and I have regular meetings with the First Secretary, the Assembly's Agriculture Secretary and Ministers from the Department for Environment, Food and Rural Affairs to discuss a variety of issues, including reform of the common agricultural policy.

Anne McIntosh: With Welsh farmers still reeling from the effects of the foot and mouth crisis, what assurance can the hon. Gentleman give that their interests will be looked after in the mid-term review of the CAP, as opposed to those of part-time French and German farmers in particular, with whom they are competing?

Don Touhig: It is recognised that we need reform of the CAP in order to obtain a better balance between agricultural support and rural development. That will mean more money for environmental and rural development, and less direct subsidies. Currently, the CAP costs Euro40 billion. The Government are working in partnership with our colleagues in the Assembly actively to ensure that the interests of Welsh farmers are protected. It is also important to get the message out to Welsh farmersthe Farmers Union of Wales was here recently, and I attended one of its eventsthat a range of measures exists to give them support in coping with changes to environmental, food safety and animal welfare matters. I am certainly happy to work with them in any way to make sure that they get all the help and support that they need.

Gareth Thomas: Is my hon. Friend aware of the serious problems caused in the farming community due to late payments under the integrated administration and control scheme? What progress is being made to sort out those problems, which cause real hardship?

Don Touhig: I am aware of the point that my hon. Friend makes; there have been some problems with the payment scheme. They resulted from the introduction of a new computer system, which had difficulty in coping with the volume of payments. It would of course be inappropriate to make payments unless the necessary controls were in place. Despite those short-term difficulties, however, I am given to understand, through discussions with Assembly colleagues who are responsible for the matter, that that major change will benefit farmers in the long term.

Roger Williams: The proposed modulation system in the mid-term review will have an unfair impact on British farmers, because of the reluctance of Governments in the past to claim funds for pillar 2. Welsh farmers in the less favoured areas will be particularly badly affected. Will the Minister hold discussions with the Liberal Democrat Minister for Agriculture and Rural Development in the Assembly to ensure that Welsh farmers are not treated so badly?

Don Touhig: I am happy to discuss anything with Ministers in the Labour-led Assembly[Interruption.]that will be in place after 1 May.
	Modulation and digression will not affect all farmers evenly, as the hon. Gentleman may be aware. Farmers receiving a single payment of less than Euro5,000 will be exempt. Initial estimates suggest that about 40 per cent. of farmers in Wales would be exempt from modulation.

Miners' Compensation

Martyn Jones: What progress has been made on miners' compensation payments in Wales.

Don Touhig: On the most recent figures I have available, in Wales we have paid 185 million under the respiratory disease scheme and 82 million under the vibration white finger scheme. Full and final payments have been made to 12,786 and 8,343 claimants respectively. That is significant and welcome progress, but the Government recognise that much more remains to be done. We intend to keep up the pressure to ensure that justice is delivered to our miners, their widows and their families. As chair of the monitoring group in Wales, I shall certainly play my part in that process.

Martyn Jones: I thank the Minister for that reply, which shows a sharp contrast to the lack of progress under 18 years of Tory government. However, a couple of cases are still outstanding, mainly due to the fact that the handling agreement between various employers of minersBritish Coal, Wimpey and so ondoes not work. Will my hon. Friend speak to the Department of Trade and Industry to move things along for the few people who are still experiencing problems with the agreement? [Interruption.]

Mr. Speaker: Order. Will the House come to order? It is unfair to hon. Members.

Don Touhig: Since January 2002, the number of full and final offers has increased from 2,800 to 18,700, and the number of full and final payments made has increased from 2,400 to 12,800. That is significant progress. I shall take on board, however, the point that my hon. Friend made. If he brings the details of those cases to my attention, I shall, as chair of the monitoring group, undertake to investigate the matter and get back to him.

Ann Clwyd: As my hon. Friend knows, miners in all our constituencies are still dying before they receive their compensation. I have to keep explaining to my constituents that the reason for that is the fact that the Conservatives fought the NUM in the courts and refused miners the compensation to which they were entitled. It was only when Labour Government came to power that the compensation was paid. We cannot make that point too often.

Don Touhig: I take my hon. Friend's point. There is no doubt that many miners who are no longer alive would have received their compensation had not the Conservative Government collaborated with British Coal to resist their justified claims. What is important is that last year we more than surpassed our target of 15,000 full and final offers. The monitoring group has decided to press IRISCthe Government's claims handlersto make sure that the oldest miners, those most ill and widows are given top priority in receiving the next batch of payments. We will concentrate on that over the next six months, which I am sure right hon. and hon. Members welcome.

Research Establishments

Adam Price: What proportion of Government research establishments are located in Wales.

Don Touhig: There are no figures available on the number of establishments. I recognise that, historically, Wales's share of research spend has been low3 per cent. or about 65 million. The Government are taking steps to seek to redress that situation.

Adam Price: I am a little surprised at the Minister's answer. A figure is available for the number of Government research establishments in Walesone. South-east England has a hugely disproportionate share. Why is not taxpayers' money used to counteract the existing concentration of the science base in the south-east?

Don Touhig: The Government, working in partnership with the National Assembly, are taking steps to improve the situation. The spending review announced the largest sustained increase in the science budget for more than a decade. The Government have announced a new tax credit aimed at boosting research and development. The National Assembly is about to launch its innovation action plan and has already established the economic research advisory panel to identify Wales's future research needs. We should contrast those developments with the policies of the hon. Gentleman's party, which, were it to come to power, would separate Wales from the United Kingdom, so there would be no investment from the UK. He will get that message on 1 May.

Firefighters' Dispute

Julie Morgan: What discussions he has had with the First Minister about the impact of the firefighters' dispute in Wales.

Peter Hain: I have regular discussions with the First Minister. I know that he shares my desire to see a just and affordable pay settlement for the firefighters to bring to an end to the current dispute.

Julie Morgan: Is my right hon. Friend aware that, in the last five months of 2002, firefighters from Whitchurch fire station in my constituency made 648 home visits to vulnerable and elderly people to fit smoke alarms or replace batteries? Will my right hon. Friend join me in congratulating them and looking forward to a fair and just settlement?

Peter Hain: I will certainly do that. Firefighters do a marvellous job on behalf of us all, risking their lives to save ours. We want a settlement that is fair to them, other public service employees and the public whom firefighters serve.

Local Government Finance

Huw Edwards: If he will meet the First Secretary to discuss the effects of proposed council tax rises in Monmouthshire and Torfaen.

Don Touhig: My right hon. Friend and I regularly meet the First Secretary to discuss matters affecting Wales.

Huw Edwards: The Government have made a generous settlement for the Welsh Assembly, but there is concern in Monmouthshire and Torfaen about the distribution of funds from the Assembly to local authorities. Given that the vast bulk of local authority money goes to education and social services, what consideration has my hon. Friend given to the prospect of a 20 per cent. cut in public spending, which is the policy of the Conservative party?

Don Touhig: All sides recognise that the generous local authority settlement made by my colleague in the Assembly is most welcome. It underpins our commitment to investment in and reform of pubic services. As someone who spent 20 years as a councillor trying to defend my community from the cuts imposed by the then Tory Government, I know that the prospect of a 20 per cent. cut in public expenditure would devastate public services in Wales.

Public Ownership (Industry)

Llew Smith: If he will make it his policy to take a public ownership stake in each of the leading 25 sectors of industries in Wales measured by annual turnover.

Peter Hain: No.

Llew Smith: Prior to the election of the Labour Government in 1997, my right hon. Friend, while recognising the need to elect that Government, still believed that it would be impossible to regenerate the economy without taking a public stake in 25 of the top sectors of industry. I thought that was an eminently sensible suggestion. Does he still think so?

Peter Hain: My hon. Friend refers to something that I wrote 20 years ago. One of his predecessors, the great Nye Bevan, said that socialists must move with the times. I am sure that my hon. Friend agrees that, just like company shares, the value of some policies can go down as well as up.

Trunk Roads

Michael Fabricant: What discussions he has had with the Secretary of State for Transport concerning improvements to trunk road links between mid-Wales and the west midlands.

Don Touhig: My right hon. Friend and I have regular discussions with Cabinet colleagues and Assembly Ministers about issues affecting Wales. More than 2 million visitors come to mid-Wales each year, and 20 per cent. of them travel from the west midlands. Good-quality roads are vital to increasing the number of tourists coming to Wales.

Michael Fabricant: I am glad that the Minister recognises that, but 2 million is not enoughwe should have 4 million. Does the Minister realise that we might get 4 million if only the link roadthe A460, which links the new M6 toll road with the existing M54were improved? What discussions has the Minister had with the Secretary of State for Transport to ensure that that happens?

Don Touhig: I have great affection for the hon. Gentleman, who is a passionate supporter of all things Welsh, which we welcome. However, it is amazing that he should demand extra spending when his party is committed to a 20 per cent. cut in public expenditure. He had better have a word with his Front Bench colleagues, because, as usual, the Tory party is at odds over those issues.

PRIME MINISTER

The Prime Minister was asked

Engagements

Tim Boswell: If he will list his official engagements for Wednesday 12 February.

Tony Blair: This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I will have further such meetings later today.

Tim Boswell: It is a time of great anxiety at home and abroad, and we have an absolute need for frankness and accountability. In the light of today's revelations of ministerial pressure on the independent Audit Commission, which comes on top of last week's revelations about a questionable security dossier on Iraq, will the Prime Minister issue a simple and binding instruction that the spinning has to stop?

Tony Blair: On the document, I point out to the hon. Gentleman that the part of the document that dealt with intelligence was indeed from intelligence sources, as the document stated. It is important that that is underlined. Of course, especially at the moment, it is important that we give accurate information to people, and the information given was accurate.

Lindsay Hoyle: I wonder whether my right hon. Friend is aware that the good constituents of Chorley wonder whether, if the report from Dr. Blix on Friday states that more time is needed or more inspectors are needed, the Prime Minister will support that view and try to ensure that a peaceful solution is reached.

Tony Blair: Of course we will take full account of anything that Dr. Blix says. I point out that he has said that the issue is not the need for more inspectors but the failure of Iraq to co-operate. I wish to make the point to my hon. Friend and, through him, to his constituents, that the issue of time for the inspectors is an issue of the time to make a judgment about whether Iraq is co-operating. If Iraq is co-operating, the inspectors can have as much time as they need and want to do their work. If Iraq is not co-operating, we have to be careful that we do not get sucked back into the situation we had in the 1990s, when the inspectors were in Iraq for years but, for example, the Iraqis denied the existence of their biological weapons programme, refused to co-operate with the inspectors, and said that it was all an invention of the CIA and the British security services. It was only when Saddam's son-in-law defectedhe was later murdered by Saddamthat we discovered the existence of the programme. I agree that we have to take full account of what the inspectors say, but the issue that we come back to time and again, in order to avoid a conflict, is whether Iraq will co-operate fully or not.

Iain Duncan Smith: NATO has been the cornerstone of British security and ensured peace in Europe for decades. Now that France, Germany and Belgium have plunged NATO into one of its greatest crises, will the Prime Minister join me in condemning the action of those Governments, and will he tell the House what he intends to do to ensure that the Turks receive the protection to which they are entitled?

Tony Blair: Of course we were one of the 16 members of NATO who wanted Turkey to be given that protection fully. Negotiations and discussions are going on in NATO at the moment and I hope that they are successful. I hope that we are able to fulfil our obligations to Turkey, because that is important for Turkey and for the NATO alliance.

Iain Duncan Smith: The French and German actions have clearly undermined NATO but, when it comes to the UN and Iraq, it is absolutely right to work for a second resolution. Given that the Labour party chairman has today described the threat to Heathrow as being on the same scale as 11 September, will the Prime Minister agree with me that our security and the disarmament of Saddam Hussein cannot be held to ransom by a French veto in the Security Council?

Tony Blair: It is precisely for that reason that I think that it is important that we make sure that the will of the UN is upheld. On each occasion, we should go back to resolution 1441, which says that Iraq should have a final opportunity to disarm itself through the weapons inspectors, and that it has to co-operate fully. If Iraq is in breach of that resolution, I believe that action should follow. However, I still believe that it is possible that we shall attain a second resolution in the UN. I believe that the matter should be resolved through the UN. After all, the original instruction given to Saddam was an instruction from the UN.

Iain Duncan Smith: Given the events of the past couple of weeks, and the different world views of France and Germany, what more would it take for the Prime Minister to reconsider his deep commitment to a single European foreign policy and army?

Tony Blair: I thought that we would get to that sooner or later. I think that it would be immensely damaging to allow the debate about European defence to go on without British input. The most disastrous policy that this country could adopt is the empty-chair, opt-out policy in Europe that is the policy of the Opposition. As a result of the measures that we secured in negotiating European defence, there can be no European defence initiative in any field without the unanimous consent of all countries. That, therefore, gives us a veto over any initiative. It is important that we play our full part in European defence. Otherwise, the consequence would be, not that there was no European defence policy, but that it would exist without British input. That would be bad for Britain, NATO and Europe.

Tony Lloyd: Does my right hon. Friend accept that the British public remains largely sceptical about the case for military action against Iraq, but that they believe that the Americans will take military action almost come what may? Will he tell the House and the country why we should believe that a war now will make peace in the middle east more likely and in the end make Britain less of a target for terrorists?

Tony Blair: I think that the best answer is to go back to first principles again. We decided to go through the UN to deal with this matterand this is the absolute answer to those who say that we were hell bent on war, come what mayso that we could get a UN resolution in order to avoid war. If Saddam had complied fully with the resolution passed last November, conflict would not even be an issue today. The choice, in the end, is for Saddam. However, if we fail to implement resolution 1441, and if we lack the determination and resolution to make sure that that mandate is carried, the consequence will be that Saddam is free to develop weapons of mass destruction. Also, there will be an increasing risk that the threat of those weapons of mass destruction and the existing terrorist threat will join together. This country will then be less secure and safe. It is best to deal with this through the UN but, as I have said from the outset, the UN has to be the way to deal the matter, not the way to avoid dealing with it.

Charles Kennedy: As the questions from the hon. Members for Chorley (Mr. Hoyle) and for Manchester, Central (Mr. Lloyd) made clear, every measure of public opinion shows that people are not persuaded of the case for the course of action being followed, despite all the persuasive efforts of the Prime Minister and the Government. Why does the Prime Minister think that that remains the case?

Tony Blair: First, I think that those surveys of public opinion will be different if there is a second UN resolution, and I point out also that we are not yet in conflict. Secondly, however, I think that people do believe that Saddam is an evil man and a dictator, and that there is a threat to this country from his accumulated weapons of mass destruction, but that they ask, reasonably and rightly, whether there is not an alternative to war. The answer to that question is that there is an alternative to war and it is set out in the UN resolution. That alternative is full and complete co-operation with the UN inspectors. However, I hope that the right hon. Gentleman will accept that, if that full and complete co-operation is not there, we have to find other means of enforcing the will of the UN. Otherwise, the threat to this country that people do accept is present will carry on in existence.

Charles Kennedy: On the latter point, could the Prime Minister therefore be more explicit than he was to the hon. Member for Chorley (Mr. Hoyle) a few minutes ago? If Dr. Blix requests more time on Friday, will the Prime Minister actively and publicly speak out in favour of that?

Tony Blair: As I said to my hon. Friend the Member for Chorley (Mr. Hoyle) a moment or two ago, of course what Dr. Blix says is important and we will take full account of it, but the judgment that has to be made in the end is one by the Security Council as to whether there is full and complete co-operation by Iraq with the United Nations inspectors. I believe that those inspectors, if they were given that co-operation, could do their work very easily; but if they are not given that co-operation, surely, the right hon. Gentleman must see the danger that we get sucked back into delays of months and then years, with the inspectors playing a game of hide and seek with Saddam, and we are unable then to shut down the weapons of mass destruction programme that he accepts, that I accept and that everyone accepts is a threat and a danger to the world.

Peter Bradley: Does my right hon. Friend not agree that differential student fees will help to create differential universities, awarding differential degrees to differential graduates with differential job prospects? If he does, can he tell me how that will fulfil our pledge to ensure equality of opportunity through our education system?

Tony Blair: There are two separate issues. First, I would simply say to my hon. Friend that, of course, there is differential funding now for different universities. So, for example, Oxford or Cambridge will receive four times the amount of public funding as, let us say, Wolverhampton university. What is important is that, if those universities want even more money, it should not come simply from the taxpayer. The second thing I would say to him is that, since we know that 90 per cent. of young people in sixth forms go on to university, the absolute keys to access are the measures to improve standards in our secondary schools that my right hon. Friend the Secretary of State for Education and Skills is taking.

Jonathan Sayeed: There is no doubt about the danger posed by Saddam Hussein or about the deceit that he is prepared to practise, but is the Prime Minister certain that we are not allowing frustration and impatience to cloud our judgment, for what new threat, proven threat or imminent threat is there to justify war?

Tony Blair: There is the threat that we have identified in the resolution last year and, indeed, for the past 12 years, and there are two ways of dealing with it. [Interruption.] Someone shouts out the word containment. When we look at the issue and the moral background to the decisions that have to be taken, I agree that, before we take the decision to go to war, the morality of that should weigh heavily on our conscience because innocent people die as well as the guilty in a war, but let us look at the morality of the present policy that we have towards Iraq and the policy that we have had for the past 12 yearsa policy of sanctions that, because of the way that Saddam has implemented those sanctions, leaves Iraq in this state: with 130 deaths per 1,000 children under the age of five, with 60 per cent. of the population on food aid, with half the Iraqis in rural areas having no access to safe water and with thousands of people imprisoned or killed every year as a result of Saddam's regime. The fact is that the only[Interruption.] I am sorry; the only alternative to disarmament by the United Nations is that we keep sanctions in place year on year, and I am simply saying that that is also a moral choice with bad and devastating consequences for the Iraqi people.

Michael Connarty: I apologise to the Prime Minister for distracting him from international matters, but he is aware of the campaign that has been run by the all-party group for haemophilia and the Haemophilia Society to get recombinant treatment for all haemophiliacs in the United Kingdom. Can he inform the House whether the Government have reached a decision and, if so, what it is?

Tony Blair: My hon. Friend raises a very important issue, and he will be aware that the Government have now allocated just under 90 million for synthetic clotting factors to help those with the condition of haemophilia. That will be rolled out across the country in the months to come, and it will make a considerable difference to the treatment of that condition throughout the country.

Iain Duncan Smith: When the Prime Minister said that he would cut by half the number of people seeking asylum in this country by September, was that an aspiration or a firm pledge?

Tony Blair: It was a firm commitment, of course.

Iain Duncan Smith: On Friday, the Prime Minister said that his new asylum target was a pledge, although I see that he has now changed that; on Saturday, the Home Office said that it was undeliverable; and on Monday, his own spokesman from Downing street called it an aspirationand all because this was another policy given to the Prime Minister by Alastair Campbell as he walked into the television studio. Why does the Government's asylum policy change every time the Prime Minister goes into a television studio to do an interview?

Tony Blair: As I have no doubt that the right hon. Gentleman will be aware, having said that we will cut it by half by September, whatever it is called, we will be held to account for itand so we should be. However, let me point out to him that what he is saying now is exactly the ridicule that he heaped on the street crime initiative. We remember at the time that that was described by the shadow Home Secretary as not having a prospect of being achieved. I might remind him today that street crime is 20 per cent. down on last year, and 33 per cent. down in London. The right hon. Gentleman will be eating his words on asylum too.

Iain Duncan Smith: Violent crime up, burglaries up and gun crime doubled since this Government took overthat is not much of a record. The Prime Minister's asylum policy is in a complete shambles. We all know that. He scrapped the white list, then reintroduced it. He introduced vouchers, then scrapped them. He scrapped benefit changes, then reintroduced them. The last time the Prime Minister went on television, he said that he would renegotiate the convention on human rights, but his Home Secretary turned round and said that he could not. All the while, the number of asylum seekers is rising. It has reached 100,000 a year. We are now taking more than any other country in Europe. Instead of getting on television, why does the Prime Minister not just get on with his job?

Tony Blair: We shall have to see. We can have this conversation again in June when the figures for the first quarter come out, and we can have it again in November when the September figures come out. The measures that we introduced last year, which toughen up the asylum procedures and which were opposed by the Conservative party every step of the way, are already making a difference. However, I agree with the right hon. Gentleman entirely: the question will be whether the commitment is met or not. We shall wait and see.

Kevin Brennan: What does the Prime Minister think of a system that encouraged, and in many cases compelled, hundreds of former workers from Allied Steel and Wire Ltd. in Cardiff and Sheerness to contribute to their occupational pension scheme, and that now leaves them facing the prospect of receiving little or nothing in return? Will he promise the House that he will consider early-day motion 710, which is in my name and which contains proposals to help those workers? Instead of security and fairness in retirement, they face insecurity and injustice.

Tony Blair: I will certainly study carefully the early-day motion to which my hon. Friend refers. He will know that this is a serious situation for his constituents. I understand that he has had a meeting with my right hon. Friend the Minister about it. There is a proposal in the Green Paper to increase to 100 per cent. the compensation given in circumstances where there has been dishonesty in relation to a pension fund. We are also looking at discontinuance payments as well, as part of a series of measures to protect people in the situation in which my hon. Friend's constituents find themselves. We will do our best to help him resolve the particular case that he raises.

Hugh Robertson: In a parliamentary written answer this week, the Ministry of Defence stated that 10,400 of our service men and women who are deploying to the Gulf receive local overseas allowance in addition to their salary. In a separate answer, it was said that single and married unaccompanied personnel lose 20 per cent. of their living overseas allowance rate after the first 17 days, and married personnel lose 35 per cent. if their families go home for more than 17 days. Does the Prime Minister agree that it is wholly wrong that members of our armed forces should be penalised financially for service in the Gulf? Will he make a firm commitment to the House to stop that penalisation?

Tony Blair: I am afraid that I cannot give the hon. Gentleman that commitment, because we have to apply the rules that have applied for many years in relation to this issue. I simply say to him that we will, of course, look at whatever we can do to give our armed forces the protection that they need, but that has to be done within the overall financial settlement of the Ministry of Defence.

Barry Gardiner: At a time when gun crime continues to rise across London, what lessons does my right hon. Friend the Prime Minister believe[Interruption.]

Mr. Speaker: Order. Let the hon. Gentleman be heard.

Barry Gardiner: What lessons does my right hon. Friend the Prime Minister believe should be learned from the successful Operation Trident and the not another drop campaign in Brent, which have seen deaths from gun crime not happen for a year and a half in that borough? Will he ensure that the use of automatic number plate registration piloted in Brent to target known gangsters is adopted throughout the capital and, in particular, will he ensure that the Mayor's cameras

Mr. Speaker: Order.

Tony Blair: My hon. Friend is absolutely right to say that there has been a very successful operation in Brent, but it is obviously an operational matter for the Metropolitan Police Commissioner as to whether it is extended throughout the capital. My hon. Friend will also know that we have a proposal, which I hope will be supported by the whole House, for anyone found in illegal possession of a firearm to be given a mandatory five-year sentence.

Angela Browning: On 3 February 2003 at column 22, the Prime Minister took personal responsibility for placing the dodgy document on Iraq in the Library of the House. Yesterday, the Minister of State at the Ministry of Defence told the House that it was only the middle part of the document that was the subject of a postgraduate thesis. The middle part of the documentpart 2is the part on Iraq's network of intelligence and security, so will the Prime Minister now tell the House who actually wrote part 2 of the document? Did he know who wrote it before he placed it in the House of Commons? Will he now apologise to the House for putting something of such questionable genesis before the House?

Tony Blair: As I said in answer to the hon. Member for Daventry (Mr. Boswell), the part of the document dealing with intelligence was, indeed, taken from intelligence services information. Secondly, the whole document, as has been accepted by everyone, is accurate.

Stephen Pound: My right hon. Friend the Prime Minister will be aware that my constituency of Ealing, North is extremely close to Heathrow airport and that the airport is the major employer of my constituents. May I tell him that the current security operation at Heathrow airport has had a sobering effect on many of us in west London and has brought home to us the imminence of the threat? Will he publicly record his appreciation of the police, military and emergency services who have done an excellent job at Heathrow airport and continue to do so?

Tony Blair: Obviously, we send our thanks and congratulations to the police, to our armed forces, to the security services and to everyone who works on our behalf to protect us against the security threat that does not affect just this country but, obviously, affects countries right across the world at the moment. It is worth pointing out that terrorist arrests are not just happening in this country, but in virtually every European country and in many other countries right across the globe. The result of that is that we occasionally have to take measures that we prefer not to take, but that are necessary to give people the security and protection that they need.

Alex Salmond: May I return to the dossierthe one that Colin Powell said was a fine document and the one that the Prime Minister tells us is accurate? Does the Prime Minister accept that it is not just a question of plagiarism but of changing key phrases? The phrase Iraqi aid for opposition groups in the original becomes Iraqi support for terrorist organisations in the Government's Downing street document. What possible motivation is there for making these changes apart from propagandising to war? If the Prime Minister cannot be trusted on that, how can he be trusted on anything?

Tony Blair: First of all, let me just tell the hon. Gentleman, as I said a moment or two ago, that the part of the document that Colin Powell referred to about intelligence is, indeed, taken from intelligence sources and is entirely accurate, as is the document as a whole. Secondly, in relation to Iraq's support for terrorist groups, he may not believe that Iraq supports terrorist groups, but its support for such groups is well known and well documented quite apart from any intelligence information that we put out. I am only sorry that he does not recognise that.

Linda Perham: Following the crash at Chancery Lane on the underground, what assurances can my right hon. Friend give my constituents and the travelling public in London? When will the Central line service resume?

Tony Blair: When it fully resumes is obviously a matter for the underground and the Health and Safety Executive. I hope that it will resume as quickly as possible. My hon. Friend will recognise that the work of the underground and the Health and Safety Executive is extremely important in providing protection for people. Accidents will occur from time to time, but after what happened the Underground and the Health and Safety Executive have been able to make sure that they have identified the cause and are now putting the matter right.

Tony Baldry: Last week the Prime Minister said that there needed to be a humanitarian plan for Iraq every bit as viable and as worked out as a military plan. How will aid for the Iraqi people be provided if the oil for food programme is suspended? What preparations are in place for refugees in Iraq, bearing in mind that after the Gulf war 1.8 million Iraqis went on the move, which was 18 times the number of people who fled Afghanistan?

Tony Blair: These are precisely the issues that we are working on now with the United Nations and with our allies. As I am sure the hon. Gentleman knows, there is already a humanitarian situation in Iraq. Indeed, there has been for many years, which is why 60 per cent. of the population are dependent on the oil for food programme. We would have to make sureand this is what we are working to do nowthat in the event of any conflict we continue that programme and that aid reaches the people whom it needs to reach.
	There are literally thousands of Iraqi refugees streaming across Europe even now. There are programmes in place, which we have to make sure we keep in place. The whole purpose of the planning that we are doing, with our allies and the United Nations, is to make sure that whatever the humanitarian consequences of any potential conflict they are dealt with properly.

John MacDougall: Does my right hon. Friend agree that the Anti-terrorism, Crime and Security Act 2001 has proved to be a success? There is an increasing threat of terrorism, and I know that arrests have been made in Glasgow and Edinburgh. Without the Act, I think the public would have felt less secure.

Tony Blair: That is right. As a result of the measures that the security services have taken and as a result of the new powers under the anti-terrorism and crime legislation, we have been able to arrest people and to detain without trial those suspected of being engaged in conspiring to commit terrorist acts here. I would repeat the point I made a few moments ago, that this is not simply happening in this country, but is happening right across Europe. There are trials and arrests of suspected terrorists and arrests. We are working very closely with other European countries to make sure that we achieve the maximum co-operation, since many of the cells in different European countries work together.

Richard Younger-Ross: Will the Prime Minister[Interruption.] The Tory Benches are so predictable.
	Will the Prime Minister ensure that, when considering the increase in pensions this year, the Chancellor will take full account of the rise that is occurring in council tax? Will he ensure that pensioners are not worse off?

Tony Blair: Of course, pensioners will pay council tax as other people do, subject to the help that is given, but the Government are giving an enormous amount of additional help to pensioners, not just in the winter allowance and the free TV licences, not just in the minimum income guarantee, but in the pension credit that is coming in April, which will mean that large numbers of pensioners are substantially better off if they have small amounts of savings. That will help them considerably.
	As for whatever the hon. Gentleman has done to offend the Conservative party, I should very much like to know, and I suspect that I might support him on that.

Phil Sawford: On Saturday I shall be taking part in a rally here in London with thousands of other people who are deeply concerned about the prospect of war with Iraq. Does my right hon. Friend have a message for the people on that rally, bearing in mind that many of them are his friends, not his enemies?

Tony Blair: Yes, I do have a message for people on that rally who I am sure are motivated by the best intentions and motives and believe sincerely in their views. My message is twofold: first, that we should be glad that we live in this country and not in Iraq because people can come together and demonstrate their position on political issues of the day; and secondly, as I said a moment or two ago, that the moral choice, which is the way that it is put by many of those who intend to go on the march, has to weigh up the moral consequences of war. The alternative is to carry on with the sanctions regime, which has resulted, because of how Saddam implements it, in thousands of people dying needlessly in Iraq every year. In addition, of course, many thousands of people are political detainees or are executed as a result of their political views. I hope that when people go on that march they at least recognise that those of us who take a different view hold that view with as much conviction and sincerity as they hold their view.

Points of Order

Glenda Jackson: On a point of order, Mr. Speaker. Yesterday, during the urgent question, the Minister of State for the armed forces imputed to me opinions that I do not hold and actions that I have not executed. He used the word Friends to imply that I had opposed military action in Afghanistan whereas, in fact, I had supported it. He then impertinently reminded me that I supported the Government and had stood on that manifesto. Neither I nor any Labour candidate stood on a manifesto that committed this country to a pre-emptive strike against Iraq with or without a mandate from the United Nations.
	I raise those issues out of respect for you, Mr. Speaker, and the House and, indeed, as a duty to my constituents to set the record straight. Equally, the Official Report implies that from a sedentary position I said that I was not proud of my party. I am very proud of my party; it is my Government of whom I am ashamed[Interruption.]

Mr. Speaker: Order. That is not a matter for the Chair, but the hon. Lady has been able to put the record straight.

Oliver Letwin: On a point of order, Mr. Speaker. In the light[Interruption.]

Mr. Speaker: Order. The right hon. Gentleman is making a point of order. Hon. Members should be quiet when they leave the Chamber.

Oliver Letwin: In the light of the remarks made in the past hour by the chairman of the Labour party that the current terrorist threat is the most serious to have affected this country, will you, Mr. Speaker, consider granting some form of parliamentary occasion to enable us to receive a statement from the Government on the assessment that they make, on a considered basis, of that very serious threat? We wholly agree that it is a serious threat. The House of Commons must surely be the place in which such statements should be made, rather than on the airwaves.

Patrick Cormack: Further to that point of order, Mr. Speaker. Would it not be appropriate for an hon. Member to move a Standing Order No. 24? The matter is urgent and specific, and it requires parliamentary debate. If you would be kind enough, I would be glad to move that exceptionally briefly so that you could grant it.

Simon Hughes: Further to that point of order, Mr. Speaker. I fully support the request made by the right hon. Member for West Dorset (Mr. Letwin). May we have an opportunity to debate that national issue separate from the international issues in an extensive half-day or whole-day debate, ideally in Government time, within the next week in the context of security in the United Kingdom at the moment?

Mr. Speaker: What I would say to the hon. Member for South Staffordshire (Sir Patrick Cormack) is that a Standing Order No. 24 cannot be moved. It must go before the Speaker prior to the House sitting and therefore cannot be done today. I say to the right hon. Member for West Dorset (Mr. Letwin) and the hon. Member for Southwark, North and Bermondsey (Simon Hughes) that I understand that a briefing on security was recently given on a very private basis. Both are privy to information

Gregory Barker: What about the rest of us?

Mr. Speaker: I merely state the fact that briefings have been given just in case someone does not know about them. I am concerned to ensure that the rest of the House is informed of that.
	I do not have the necessary powers for today, but the usual channels are available to hon. Members. It should be possible to pursue the matter to see whether a statement can be made to the House. It is for Ministers to make that statement and to approach me on the matter.

Animals (Electric Shock Collars)

David Rendel: I beg to move,
	That leave be given to bring in a Bill to ban the manufacture, sale or use of collars which administer electric shocks to animals
	In 1996, I presented a Bill to the House with the aim of banning the manufacture, sale and use of electric shock dog collars. It was identical to the present Bill save for the fact that it referred only to dogs, whereas the new Bill refers to collars used on any animal. The reason for the change is simply that there was a loophole in my original Bill. Banning the manufacture or sale of equipment for use on dogs alone is pointless, because it would be virtually impossible to prove that the equipment had not been intended for use on, say, cats or animals of a similar size. That may be why, sadly, my original Bill was never passed. Having removed the loophole, however, I hope that the House will now see fit to give me leave to introduce the new Bill.
	Electric shock collars were first drawn to my attention by one of my constituents, who was horrified to see them advertised in a local magazine. There are two basic types, both of which depend on the animal wearing a collar to which a battery is attached. When the battery is switched on, the animal is given an electric shock. In one type, the battery is switched on by remote control, and is intended to be used when the animal is being trained. When it does something that the user of the equipment wishes to discourage, the user activates the remote control and the pain experienced by the animal is expected to persuade it not to repeat the unwanted behaviourin other words, it is a basic form of aversion therapy.In the other type, a wire is laid in the ground around an area within which the animal is to be restrained, such as the owner's garden. A current in the wire activates the shock collar whenever the animal goes too close to the edge of the area. The idea is that the animal learns, again by a basic form of aversion therapy, to stay well within the constraining area without the need for erecting tall fences around the property.
	The equipment should be banned because there is obviously inherent cruelty in using pain to discourage unwanted behaviour when one could and should be using rewards to encourage good behaviour. All the animal agencies agree that all dogs can be trained by using positive encouragement if training is correctly carried out from the beginning. Moreover, even if a dog has been poorly trained, and has learnt bad habits that prove difficult to eradicate, alternative equipment is on the market, for example citronella spray collars, which can be used to break bad habits without causing the animal physical pain. Such collars work by emitting a lemon-flavoured spray instead of an electric shock when the unwanted behaviour is exhibited.
	The fact of the matter is that electric shock equipment is used mainly by those who simply cannot be bothered, or do not have the patience, to train a dog properly with the use of rewards, and are prepared to inflict pain in the hope that it will prove a short cut to good behaviour. Let me make it clear that I have no doubt that the equipment can be at least superficially effective. There is, however, considerable evidence that the electric shock collars, even when used as intended, can have unfortunate side effects. In the magazine PetDogs, the Association of Pet Behaviour Counsellors said:
	A dog experiencing an unpleasant shock to the neck 'out of the blue' will associate the sensation with whatever the dog happens to be focusing on at the time . . . It could, for example, become afraid of, and as a result potentially aggressive towards, owners, children, other dogs or strangers.
	There is a recorded example of one dog, which, when its collar was first activated, panicked and ran for home across a number of dangerous roads. After a further visit to the same spot on Wimbledon common, the dog again bolted and was missing for a week. A Dutch study by Dr. Joanna Van Der Borg compared dogs trained using electric shock collars with dogs trained using more conventional methods. The shocked dogs showed persistent and long-term behaviour differences that indicated that they were under stress and in fear.
	It is not just a case of those collars being unnecessarily cruel and potentially damaging when used as intended. The case for a ban is far stronger, because the greatest danger for the animals arises when the equipment is either misused or malfunctions in some way. Misuse can be unintentional or the result of a fit of anger at a dog's refusal to comply with the owner's attempt to train it, or it can even happen, perish the thought, at the hands of sadists. In one case, for example, a dog developed an irrational fear of returning home after dark. It was eventually found that the dog had been shut up overnight in a room, half of which was sufficiently close to the electric wire surrounding the property to activate its electric collar. Perhaps, come to think of it, that is not such an irrational fear.
	Other cases include those of dogs that have been brought to vets with severe neck burns. Of course, it is always claimed that such injuries are the result of a malfunction of the collar rather than deliberate mistreatment. One inevitable cause of malfunction is that the electrical properties of an animal's neck are affected by how wet it is. An animal that suddenly runs off through long grass that is wet, or is simply out on a rainy day, may experience from its collar a level of pain different from that which would be felt by a dry animal.
	Those who support the use of shock collars often challenge opponents to feel a collar when it is activated so that they can experience how slight the shock is, but a study by Ewan Ferguson, a specialist in veterinary dermatology on behalf of the National Canine Defence League, has shown that an animal's coat of fur provides a significant degree of physical protection. As a result, the epidermis of normal canine skin is significantly thinner than that of human skina fact that I certainly would not have known until I did some research on the matter. Indeed, I do not suppose that most hon. Members were aware of it. Moreover, an animal's sweat glands work in an entirely different way, so that the level of humidity of its skin, even when it has not been near an external source of water, is very unpredictable. For all those reasons, there is considerable danger that an animal may suffer a great deal more pain from its collar than the owner intends or even realises because of circumstances over which the owner may have little or no control.
	So what can we do about the problem? When the matter was first brought to my attention, it was immediately clear that no Government would be prepared to ban such equipment if they were using it themselves. I therefore asked some parliamentary questions about the use of shock collars in the public services. To my horror, I discovered that, although most public services were not using such equipment and had no intention of ever doing so, the Prison Service owned such a collar and had used it, as had several of our police forces.
	Happily, my investigations rapidly led the right hon. Member for Maidstone and The Weald (Miss Widdecombe), the then Home Office Minister with responsibility for such mattersI am happy to see her in her place today; if I may say so, she is well known for her support for animal welfareto ensure that the equipment was never used again by the Prison Service. Moreover, after the Labour Government took office, to their credit, they ensured that prison regulations were changed to ban the use of electric collars. Meanwhile, further pressure from me and a number of animal charities and welfare organisations soon led the Association of Chief Police Officers to decide to end the use of the collars by the police.
	I therefore believe that no public bodies still make any use of that horrible equipment. Perhaps as a result, a Bill to ban the manufacture, sale and use of electric collars now has very widespread support. For example, as hon. Members will see if the House gives me leave to bring in the Bill, it already has supporters from five political parties represented in the House, including the three major national parties. It is also supported by the all-party group on animal welfare and the Royal Society for the Prevention of Cruelty to Animals, which both alerted the Department for Environment, Food and Rural Affairs to their views in their submissions to the recent consultation on a potential new animal welfare Bill. The dog legislation advisory group, which includes representatives not only from the RSPCA, but from the Kennel Club, the National Canine Defence League and the Blue Cross, is also very supportive, as are a number of animal welfare charities, such as the People's Dispensary for Sick Animals and a large number of specialist pet care magazines.
	I do not pretend that the Bill is of earth-shattering proportions or that it will change the fate of nations, but it is simple and straightforward and has the potential to improve animal welfare and prevent much suffering. Given the level of support that it has received from all those who know and care about animals, I trust and hope that I can count on the support of all hon. Members this afternoon.
	Question put and agreed to.
	Bill ordered to be brought in by Mr. David Rendel, Mr. Roger Williams, Bob Russell, Mr. Ian Cawsey, Dr. Nick Palmer, Mr. Andrew Rosindell, Mr. Elfyn Llwyd, Lady Hermon, Mr. Nigel Jones, Mr. Roger Gale, Mr. Keith Bradley and Miss Ann Widdecombe.

Animals (Electric Shock Collars)

Mr. David Rendel accordingly presented a Bill to ban the manufacture, sale or use of collars which administer electric shocks to animals: And the same was read the First time; and ordered to be read a Second time on Friday 7 March, and to be printed [Bill 57].

Opposition Day
	  
	[Fourth Allotted Day] [Second Part]

Economy and Public Services

Mr. Speaker: I inform the House that I have selected the amendment tabled in the name of the Prime Minister.

Michael Howard: I beg to move,
	That this House acknowledges the serious concern about the current state of the UK economy, including economic imbalances, the failure of the Chancellor of the Exchequer to meet his economic forecasts, the ever higher taxes, the disproportionate fall in the UK stock market, the decline in productivity growth, and the crisis in funded pensions; recognises the harm done to business and the enterprise culture as a result of increases in red tape and business tax since 1997, now estimated to cost up to 15 billion a year; is shocked by the Chancellor of the Exchequer's complacency on these matters; is concerned that the forthcoming rise in National Insurance contributions will have further adverse effects on jobs, incomes and economic confidence; notes that tax revenues have already risen by 36 a week for every man, woman and child since 1997; deplores the fact that, despite substantial increases in taxes and Government expenditure, the lack of real reform means that the promised improvements in public services have not materialized, with a recent rise of 22 per cent. in NHS funding leading to a rise of just 1.6 per cent. in the number of patients treated, with one in four children leaving primary school unable to read, write and count properly, with a crumbling transport system, and with only one crime in every 40 resulting in a conviction; and calls on the Government to end its cycle of tax and spend and fail.
	For the avoidance of doubt, I draw the attention of the House to my declaration in the Register of Members' Interests.
	This debate is taking place just before Valentine's day, and it is appropriately timed. It is being held at a time when the British people's love affair with new Labour is coming to an end, when the unblinking loyalty of Labour Back Benchers is reaching breaking point, and when the sham marriage of the Chancellor and the Prime Ministera marriage in which one partner thought that the pre-nuptial agreement would lead to No. 10 Downing street rather than the Back Benchesis falling apart. It did not have to be this way. If we had a Government who delivered, we would not be having this debate today. But they have not delivered; they have repeatedly broken their promises to those who have seen their personal pensions halve since Labour took office, to mortgage payers whose endowments will not match their liabilities, and to investors who have seen the stock market fall to a level far below what it was in 1997. Labour told all those people that things could only get better. What of the promises to those who rely on our hospitals and schools? They, too, have been failed by this Government.
	Anyone listening to the Chancellor of the Exchequer could be forgiven for thinking that none of this mattered. He found time last week to deliver an Olympian address to the Social Market Foundation. In it, there was barely a word about the chronic failure of all too many of our public services, and barely a word about the serious imbalances in the British economy. Instead, he told the foundation that his policies were taking the country
	along the road towards a Britain of opportunity and security for all.
	As the economics editor of The Guardian pointed out this week, either
	he has started to believe his own rhetoric, or he is living in a parallel universe.
	The very week of the Chancellor's speech was another black week for the British economy. On Monday, BDO Stoy Hayward said that its optimism index of British business had fallen for four quarters in a row. On Tuesday, a Confederation of British Industry survey showed the highest proportion of firms operating below capacity for 20 years, and found that manufacturers' confidence had fallen in every region of the United Kingdom. On Wednesday, there were figures showing the weakest new business activity for a year. On Thursday, an interest rate cut was seen as such a sign of concern about the economy that share prices actually fell, and Friday saw the sharpest fall in manufacturing output and the highest number of insolvencies for a decade. If the Chancellor had not been living in his parallel universe, none of this would have come as a surprise.

Phil Hope: Speaking of parallel universes, will the right hon. and learned Gentleman confirm that, if his party were in government, it would introduce a 20 per cent. cut across the board in public spending? Yes or no?

Michael Howard: Of course we are not going to do anything like thatwe never said we would. We said that we would look to save money from the money that is wasted by the present Government, and they do waste far too much.
	I want to return to the Chancellor of the Exchequer's parallel universe. After all, if one imposes burdens on business through taxes and red tape that the CBI estimates as costing up to 15 billion a year, why should anyone be surprised that corporate profitability is at its lowest level for nine years, that business investment has fallen more sharply than it has since records were first kept more than three decades ago, or that the rate of productivity growth has halved?

Several hon. Members: rose

Michael Howard: I shall not give way for the moment.
	If those burdens on business include a 5 billion a year tax imposed on pension funds, why should anyone be surprised when funds offload UK equities in favour of overseas equities and the UK stock market falls further and faster than those in the United States and France?

Barry Gardiner: The shadow Chancellor said that he had said nothing of the sort, referring to the hon. Member for Arundel and South Downs (Mr. Flight). Does he agree that the Leader of the Opposition, in referring to the hon. Member for Arundel and South Downs, said, He is looking to see if he can get to that figure. He believes it is a rational target to look at.? Either the shadow Chancellor agrees with the hon. Member for Arundel and South Downs or he believes that he, too, is living in a parallel universe. Which is it, and if the hon. Gentleman is in a parallel universe why does not the Shadow Chancellor get rid of him from the Front Bench?

Michael Howard: Let me try to explain the matter to the hon. Gentleman in words of one syllable. We believe that a great deal of money is being wasted by this Government, and every day more evidence becomes available that that is so. [Interruption.]

Mr. Speaker: Order. The hon. Member for Brent, North (Mr. Gardiner) intervened on the shadow Chancellor. He should have the courtesy to allow him to reply. That goes for all hon. Membersit is far too noisy.

Michael Howard: We believe, to complete my answer to the hon. Gentleman in words of one syllable, that we have a duty to the British taxpayer to examine and to remove the waste that has come from the policies of the present Government. The more that the hon. Gentleman and other Labour Members bleat about that, the less credit they will be given by the electorate.
	Now I want to talk about what the Government are doing. I remind the House that as the Chancellor was delivering his Olympian address to the Social Market Foundation last week, 15 new regulations were being introduced, as they have been on every working day, on average, since the Government took office. That is the real world. That is the world in which British business has to live. That is the world in which 95 per cent. of company leaders say that regulation has increased over the past five years. That is the world in which Britain has fallen out of the top 10, down to 16th, in the world competitiveness league. It is a world in which the Government have steadily, relentlessly and remorselessly undermined the ability of British business to win orders and to create jobs.
	What is the result of all that? In the real world, Britain has recorded a trade deficit in every month since January 1998, and this week the deficit in goods in 2002 was shown to be the largest since records were first keptin 1697. In the real world, as the director general of the British Chambers of Commerce said this week,
	The UK economy is obviously losing its competitive edge in the international marketplace.

Kali Mountford: I do not want to remind the right hon. and learned Gentleman of the cuts that were made and the many jobs that were lost when his party were in government, but, on the balance of trade, would it not be reasonable to compare the balance of trade of this nation with that of all other nations? If he looks at the records, they will show that the balance of trade here is exactly equal to that of the Organisation for Economic Co-operation and Development and the European Union as a whole.

Michael Howard: It is reasonable to look at our record today compared with our record in the past. The fact that we have the biggest deficit since 1697 indicates that not everything in the world is as wonderful as the Chancellor of the Exchequer suggests that it is in his parallel universe.
	In the real world, pensions are in crisis. The value of personal pensions has halved in the past five years. Fewer than four in 10 final salary schemes are open to new members, and half of those are contemplating closure. Of course, for those living in a parallel universe the Chancellor's decision in 1997 to tax the dividend income from pensions savings at 5 billion a yearequivalent to 400 per contributor per yearhad absolutely nothing to do with that lamentable performance.
	According to the Chancellor, none of this matters. He says that what he refers to as the fundamentals are all doing fine. Of course, we are all pleased that unemployment overall continues to fall, but does the Chancellor recognise that manufacturing employment also continues to fall, that it has fallen by 600,000 since Labour took office, that manufacturing output fell by 4 per cent. last year, and that both manufacturing output and manufacturing investment are at lower levels than they were in 1997, when this Government took office? Is it the sign of a fundamentally sound economy when manufacturing has been teetering on the brink of recession, while consumers are saving less and have built up higher debts than ever before? Indeed, the Labour-dominated Select Committee on the Treasury highlights the imbalances in our economy, which it describes as potentially serious and increasing.
	Not only is the economy unbalanced, but the Chancellor's forecasts for growth, which he said were cautious and prudent, had to be downgraded. He boasted at the weekend that growth in 2002 was 1.7 per cent., but he had forecast 1.6 per cent. He somehow forgot to mention that in his Budget he had forecast growth of between 2 and 2.5 per cent. The 1.6 per cent. was his downgraded forecast made on 27 November. If the Chancellor is reduced to boasting that he got right a forecast that he made on 27 November for the calendar year 2002, that shows just how far his reputation has fallen.
	The Institute for Fiscal Studies says that even if the Chancellor's growth forecasts are correct, he will still have to borrow more than he currently plans. By 200506, it expects a 4 billion deficit on the current Budget, compared with the Chancellor's forecast of a 5 billion surplus. Yet, over five years, his own figures on borrowing have already leaped from 30 billion in the 2001 Budget to 66 billion later that year, to 72 billion in last year's Budget, and to more than 100 billion in the latest pre-Budget report.

Tom Harris: rose

Michael Howard: I am afraid that Labour Members will have to listen to this for a while longer.
	The IFS does not think that the Chancellor is on course to meet his so-called golden rule in the next economic cycle. It says that he will have to raise taxes from April 2005 by another 11 billion if he wants to meet his rule with hisallegedlyplanned level of caution. That was the golden rule that was meant to be rock solidthe lynchpin of his entire approach. What would he say to the Labour-dominated Select Committee, which now does not even trust him to determine the economic cycle on which his rules depend? It says:
	There is a danger that decisions by the Treasury and the determination of the economic cycle could be seen to be taken simply in order to comply with the golden rule.
	It wants an external body, such as the National Audit Office, to validate the decisions. Does not that speak volumes about the Chancellor's downgraded reputation and fiscal rules?

Gareth Thomas: The right hon. and learned Gentleman is a fair man. Will he give credit where it is due? Is not it true that, in a difficult global climate, the British economy continues to grow faster than that of any other G7 country?

Michael Howard: No, it is not. The Chancellor has had stewardship of the economy for nearly six years. In that time, it has grown more slowly than that of the United States. It has also grown more slowly than in the last five years of the Conservative Government. The hon. Gentleman should bear that in mind before asking such a question.

Geraint Davies: Will the right hon. and learned Gentleman give way on that point?

Michael Howard: No, I want to deal with the Chancellor's rules. I have spoken about his golden rule and I want to move on to his sustainable investment rule.
	The Treasury Committee also called for all the Government's contingent liabilities to be recorded in the Red Book. If the Chancellor had not put more than 100 billion of his potential liabilities off balance sheet, Enron-style, public sector debt would already have reached his rule's 40 per cent. limit.
	The further tax rises that the Institute for Fiscal Studies predicted would be on top of those that are already on course for April. The Chancellor's response to the anxieties of business and investors about the burdens that he has imposed on them is to add to them. There have been 53 tax rises since 1997. In 53 days, on 6 April, national insurance rates will increase for employees and employers. That is a tax on pay and on jobs.
	The Chancellor imposes a tax on pay at a time when people are feeling nervous about the future, exposed and under pressure. For example, the nurse consultant on 34,000 a year will be 26 a month worse off. The police inspector on 37,000 a year will be 30 a month worse off. The Chancellor imposes a tax on jobs at a time of growing economic uncertainty. Does he recall that after the 2000 Budget he issued a press release that said that lower national insurance contributions would promote employment opportunities? What does he believe that higher contributions will do?
	The increase in national insurance contributions is a damaging tax that is imposed in the wrong way for the wrong reasons at the wrong time. For many people, it will be the ultimate injustice. People already have to pay out of their own pockets, on top of taxes, because of failing public services. Two hundred and fifty thousand people a year, who are not covered by an insurance scheme, pay for their operations because the Government are not providing the improvements that they promised in the national health service.
	Every year, the Government promise better public services in return for higher taxes, but we get only the higher taxes. In the Chancellor's parallel world, public services are improving wonderfully. He told the Social Market Foundation that the Government had set out a modern model for the NHS. However, in the real world, a 22 per cent. increase in health spending in two years led to an increase of less than 2 per cent. in the number of people receiving hospital treatment. What sort of modern model is that?
	What sort of modern model has more than 1 million people on waiting lists, and accident and emergency departments where patients have to wait hours, first to be seen and then to be admitted? We were told yesterday that patients are kept in ambulances for hours to fiddle the Government's figures. Does a modern model for schools lead to one in every four children leaving primary school unable to read, write or count properly, and mean that an increasing number of children in inner cities leave school without a single GCSE? In a modern model, do violent assaults on teachers quadruple, teacher vacancies double and fewer than 50 per cent. of teacher trainees still teach three years later?
	Does a modern model for transport mean increasing congestion and the longest commuter travelling times in Europe? Rail delays have doubled under Labour, with one in five trains running late.

Several hon. Members: rose

Michael Howard: In the Chancellor's parallel universe, none of that matters[Interruption.]

Mr. Speaker: Order. The shadow Chancellor has indicated that he is not giving way.

Michael Howard: The Chancellor says that there is nothing to worry about because his public service agreements will sort everything out. In his parallel universe, they are a great success. He believes that they are a shining beacon of reform for the rest of the world to admire. At the Social Market Foundation, he spoke about clear objectives, well-defined targets, consistency, accountability, equity and flexibility.
	In the world that the rest of the country inhabits, the Chancellor's ludicrous targets are objects of scorn. People now know about the Chancellor's vague and ill-defined targets, and his targets to set targets. They know about stifling local initiative, diverting time and energy from front-line services and redefining trolleys as beds on wheels so that the Chancellor's targets can be achieved.
	Have not the Chancellor and his colleagues used targets as a substitute for genuine, decentralising reform? More than a year has passed since the Chancellor said:
	I'm going to insist that any additional resources must be matched by reforms so that we get the best value for money. There is not to be one penny more until we get the changes.
	Throughout their time in office, the Government refused to introduce genuine reform. Its absence explains their cycle of ever-higher taxes and declining public services. Their only answer is higher taxation. When that fails, they impose even higher taxes.

Bob Blizzard: Will the right hon. and learned Gentleman give way?

Michael Howard: No, I want the hon. Gentleman to pay special attention to my point.
	From April, Government spending will race ahead for the first time at more than 50 mphmillion pounds per hour. The Chancellor boasts about April's tax on pay and his tax on jobs. He treats ever-higher taxes as a badge of honour. However, they are a sign of his failure and that of his Administration.
	Reforming public services is the only way to break the vicious circle. It is the key to everything that we want to achieve. The need for it is urgent and pressing. Only through genuine reform will we obtain the first-class public services for which our people cry out. It is vital to achieve that goal for parents, patients and passengers. It is vital for business and for millions of hard-pressed taxpayers.
	The Chancellor promised no more boom and bust. He has managed to provide both at the same time. He promised prudence with a purpose, but he has been neither prudent in handling the nation's finances nor purposeful in reforming public services. He has presided over missed growth forecasts, halved productivity growth, a pensions crisis and increasing Government debt.
	The Chancellor excelled in soundbites, but they are now turning to ashes in his mouth. Colleagues, past and present, are queueing up to criticise him. Only yesterday, the Secretary of State for Health and the Secretary of State for Education and Skills held a press conference at which they rubbished the basis of his Social Market Foundation speech. Mo Mowlam calls for him to be moved. Andrew Rawnsley asks in The Observer whether his next Budget might be his last. Peter Preston writes in The Guardian[Interruption.] Labour Members may find that they dismiss The Guardian at their peril.
	Peter Preston said:
	the chances of Gordon Brown ever becoming Prime Minister have diminished, are diminishingand will continue to diminish inexorably. A sad, sad song.
	The saddest song of all, however, is that of the British people. They do not live in the Chancellor's parallel universe; they know all too well the reality of the Government's broken promises. Daily they must pay the price of his failure, and more and more and louder and louder they find themselves saying of the Chancellor and of this Government Enough is enough.

Gordon Brown: I beg to move, To leave out from House to the end of the Question, and to add instead thereof:
	notes that as a result of this Government's economic management, even in times of global economic uncertainty when the world economy is experiencing the first simultaneous downturn for nearly thirty years and twenty of the world's biggest economies including the United States, Japan, Asia, much of Latin America and Europe have been or are in recession, the UK economy continues to grow with low levels of inflation and low interest rates; welcomes the 1.5 million extra jobs created since 1997 and resists any attempts to abolish the New Deal and the tax credits that make work pay; further welcomes the cuts in the rates of corporation tax, capital gains tax and small business corporation tax since 1997 and the introduction of the RD tax credit; and believes that after years of neglect between 1979 and 1997 it is even more important to invest in public services and to support the Government's record extra investment in Britain's health, education and other public services combined with reform to build high quality public services for all and its resistance to any attempt at this time of global uncertainty to cut public spending.
	The right hon. and learned Member for Folkestone and Hythe (Mr. Howard)the shadow Chancelloromitted to tell the House today the central economic facts. We have the lowest inflation that we have had for 40 years this year, as we did last year and the year before that. We have the lowest interest rates that we have had for 48 years, and we have lower unemployment than America, Japan and the rest of Europe for the first time since 1945. Today's employment figures, which the shadow Chancellor glossed over

Michael Howard: I did not.

Gordon Brown: He mentioned them, but glossed over them. They show that the number of people claiming unemployment benefit have fallen by 3,500 in a month, that unemployment fell by 36,000 over three months, and that despite all the economic uncertainties and the restructuring, which I acknowledge is taking place in the British economy, employment is up by 150,000.

Julie Kirkbride: Does the Chancellor think it is a good thing that one person in four now works for the Government?

Gordon Brown: It is right that we have more doctors in the health service. It is right that we have more nurses, more teachers, and more policemen and policewomen.
	Running through the shadow Chancellor's speech was one assumption and one assumption only: that the answer to every problem was public expenditure cuts. There are more people in work today than there have been at any time in our history. There are 1.5 million more people in employment now than there were in 1997. There is more employment in every region of the country. Let us remember that in the 1980s 350,000 young people had been unemployed for more than a yearhundreds in each of our constituencies. Today the figure in Britain is 5,000, an average of eight per constituency. Moreover, far from there being an inflation problem, the figures show that earnings growth has fallen to 3.7 per cent.
	In the face of the global slowdown that every country has had to confrontwe have seen recession in America, recession in Japan and recession in Germanyour monetary and fiscal policy, and the changes that we made in 1997, have not just enabled us to cope with that global slowdown without recession but have enabled growth to rise in every quarter of nearly six years of this Labour Government. The worst policy that could be pursued is that of the shadow Chancellorto cut spending, abolish the new deal, get rid of tax credits that make work pay, and end up repeating the mistakes that the Conservatives made in the early 1990s.

John Redwood: Is the Chancellor proud of the fact that 600,000 people have lost their jobs in manufacturing? Is he proud of the two manufacturing recessions over which he has already presided? Is he proud of what is happening in manufacturing today? What does he say to those people?

Gordon Brown: What I am proud of is this: we have cut corporation tax, introduced a research and development tax credit for manufacturing, and introduced capital allowances. When the right hon. Gentleman was a Minister in the Conservative Government, 3 million manufacturing jobs were lost.
	When it comes to solutions to the problem, we must recognise that the shadow Chancellor and the right hon. Gentleman are not saying exactly the same things. What did the right hon. Gentleman say in his election address in 2001?
	We need a Government that recognises that teachers, nurses, doctors and policemen in the Thames Valley need pay that meets the cost of living.
	The shadow Chancellor is not prepared to say that.
	Worse than the danger of abolition of the new deal and tax credits is a proposal advanced by the Leader of the Opposition in an interview on 30 December 2002, when he announced that a study was being conducted by the hon. Member for Arundel and South Downs (Mr. Flight), the shadow Chief Secretary to the Treasury. The study, he said, was
	looking at the target of 20 per cent. savings across the board in Government spending.
	[Interruption.] I will quote the whole interview. The interviewer said to the Leader of the Opposition:
	I'm after a precise figure.
	The answer was:
	And we're looking at savings. Well I'm telling you. That's exactly what Howard Flight said.
	The interviewer said:
	And you would concur with up to 20 per cent.?
	The answer was:
	He said quite categorically yes. Well that's what we're looking at. What we're trying to say is that here is a Government that is wasting money dramatically.

Howard Flight: If the Chancellor had done us the courtesy of reading the report to which the Leader of the Opposition referred, he would know that it referred to areas of potential for savings. That was absolutely clear. Moreover, the report stated twice that it did not refer to cuts in health or education spending. I ask the Chancellor to end the spin propaganda in which he has been indulging.

Gordon Brown: Now we are getting to the heart of the matter. Potential cuts of 20 per cent!
	The hon. Gentleman says that that did not apply to the health service. In that World at One interview on 30 December, however, the Leader of the Opposition said that he was looking at cuts
	in extra staff that don't deliver in the NHS and also costs and wasted consultants; he's looking at all of that area.

Howard Flight: I am surprised that the Chancellor of the Exchequer displays such economic naivety. The scope that exists, to an extent, to make economies in some areas accommodates extra spending in others. The virtuous action of looking for areas of waste, which the Chancellor should be doing, would enable him to deliver much better services by redeploying funds.

Gordon Brown: This is very helpful. The shadow Chancellor will be very pleased that the shadow Chief Secretary has joined us. He has confirmed the potential for savings. He has confirmed that the study has taken place. He has not denied the Leader of the Opposition's statement that he was looking for
	extra staff that don't deliver in the NHS.
	Is the hon. Gentleman saying that the Leader of the Opposition was misleading people in that interview?

Howard Flight: The Leader of the Opposition was clearly referring to my comments and to the potential, not to an across-the-board figure. I repeat: I am astonished that the Chancellor has to resort to such cheap, false propaganda to establish his credentials.

Gordon Brown: The hon. Gentleman has not denied my point that he is looking at cuts in the national health service. That is what the Leader of the Opposition said. [Interruption.]

Mr. Speaker: Order. We must have some order in the Chamber.

Gordon Brown: I suggest that we take up the offer made by the shadow Chief Secretary to give us a copy of his report when it is completed. He has identified the potential for savings, and he has not denied that the national health service is part of the investigation. Either that, or the Leader of the Opposition is misleading people.
	When asked:
	And you would concur with up to 20 per cent.?,
	the Leader of the Opposition replied:
	He said quite categorically yes. Well that's what we're looking at.

Michael Howard: May I remind the Chancellor of a sentence that appeared in his party's 1997 general election manifesto? Funnily enough, it is directly relevant. The manifesto contained the following sentence:
	The level of public spending is no longer the best measure of the effectiveness of government action in the public interest.
	Does the Chancellor still adhere to that?

Gordon Brown: Yes, and because we are increasing value for money and the amount of public money spent, there are more doctors, more nurses, more teachers and more police. The shadow Chancellor cannot get away from the fact that he is embarrassed by what the shadow Chief Secretary has been up to. The interesting thingI ask the shadow Chancellor to confirm thisis that, in 1997, he made a speech to the British Chambers of Commerce in which he recommended that public spending be reduced to 35 per cent. of national income, and said that that was the right target to aim at. What is 35 per cent. of national income but a 20 per cent. cut in public spending? Until the Conservatives come clean on what their real proposals are and how they would affect the national health service, in every constituency in this country they will be offering explanations as to the number of doctors, nurses and teachers, and they will have to offer such explanations every weekend.
	The shadow Chancellor may have something of a problem in that regard. I have in front of me an article that he wrote in the Folkestone Herald. Of course, he is adamant that he does not want to make any spending commitments. However, he said in that article:
	I was told . . . about the difficulties . . . as a result of the shortage of GPs . . . Overall Shepway has 44 full-time GPs. It should have 53 . . . The present state of affairs is unacceptable.
	Is that not a demand for nine more GPs? Does that not cost at least 500,000? If that were repeated throughout the country, would we not need to spend more on the national health service? How can the shadow Chancellor say that he refuses to spend more on the national health service? Just to show that he is consistent in what he is advocating locally but not telling us nationally, I refer the House to an article that he wrote only a few days ago, in the Folkestone Herald of 9 January, entitled Housing must be our priority. What does he say now about public spending? He states:
	I believe we need more social housing . . . This is something that needs to be addressed as a matter of urgency.

David Cameron: rose

Gordon Brown: How can the shadow Chancellor square his demand for extra public spending in Folkestone with the shadow Chief Secretary's demand that it be cut by 20 per cent.?

David Cameron: rose

John Bercow: rose

Gordon Brown: I shall give way to the former shadow Chief Secretary, and then I hope to make some progress.

John Bercow: I thank the right hon. Gentleman for giving way. Given that activity rates in the national health service are now rising at only one fourteenth of the level of the increase in NHS expenditure, given that last year alone 6,000 nurses left the United Kingdom to go overseas, and given that the right hon. Gentleman failed to meet and then scrapped his own target, set in 1998, for a reduction in truancy, is it any wonder that the British people and his own Cabinet colleagues are selling shares in this Chancellor?

Gordon Brown: This debate must be the first time Conservative Members have regretted the hon. Gentleman's resignation from the post of shadow Chief Secretary, because they have now been landed with the hon. Member for Arundel and South Downs. As far as the health service is concerned

David Cameron: rose

Gordon Brown: If I remember rightly, the shadow Chancellor gave way only four times. I have already given way to shadow Front Benchers at least six times, and I now have the alternative Front Bench lining up to make their case for office under the Leader of the Oppositionor should I say the current Leader of the Opposition?
	There were 4.5 million elective admissions in hospitals when we came to power; there are 5.3 million now. There were 11.3 million outpatient attendances when we came to power; there are 12.7 million now. There were 1.8 million emergency admissions; there are 2.25 million now. Do not let people say that the health service is not having, and dealing with, more admissions, more outpatients and more emergency admissions. It is about time Conservative Members started to praise the national health service, instead of calling it a Stalinist creation.

Several hon. Members: rose

Gordon Brown: I have to make progress, and I want to make two announcements that I believe will be of interest to the House. In the pre-Budget report, I set aside 1 billion to be drawn on by the Ministry of Defence for security and military matters, if and when it becomes necessary. Nothing should prevent us from equipping and supporting our armed forces, who perform a great service for Britain, as do our security services. Money is being drawn down by the MOD to meet the costs that it is entailing. I shall report to the House again in full in the Budget, but I can tell it today that in this financial year I have increased this sum from 1 billion to 1.75 billion, to be set aside for possible commitments, and to be drawn on only if and when necessary. This is, of course, a time of great risk economically and geopolitically, and I believe that most Members of the House will support what I am doing.

Patrick McLoughlin: Will the Chancellor give way?

Gordon Brown: If it is on that point.

Patrick McLoughlin: I am grateful to the Chancellor, who has just been very helpful to the House. Listening to last night's news, we were told that a number of new police officers had also been deployed to Heathrow airport as a result of yesterday's increased security measures. Does he intend to increase the budget to the Metropolitan police to cover that?

Gordon Brown: I am grateful to the hon. Gentleman for that intervention. What he says is true, but he would not expect me to comment on operational matters relating to the police. However, the amounts of money made available in the spending round for policing in general and for the Metropolitan police in particular have increased substantially. I believe that, overall, there will be 5,000 more policemen as a result. So far as security is concerned, in these difficult days we will do whatever is necessary to protect and to make secure the British public.
	Just as we are making provision for any necessary preparations for action, we are also providing to meet our responsibilities in terms of peace and tackling world poverty. I want the House to be the first to know of the new document on the technical details of the international finance facility, which I hope we can publish tomorrow with the support of all parties. It will show how aid can rise to $100 billion a year for the poorest countries, and I am grateful to Conservative Members in this House and in the House of Lords, and to members of all partiesLiberals and nationalistsfor their support for this initiative.
	I have a second announcement for the House. In addition to the work on the euro that is already under way, we will publish an additional four studies, which report on issues that the House will agree are important. The first study concerns the exchange rate and macro-economic adjustment; the second concerns the transition to the euro; the third explains the overall framework for the assessment of the five tests; and the fourth brings together specially commissioned papers by international academics on aspects of British membership of the euro. I look forward to giving evidence to the Treasury Select Committee on 27 February. Next Monday, before I meet the Committee, we will publish our progress report on European economic reform.

David Laws: Will the Chancellor give way?

Gordon Brown: Yes, if it is on that specific point.

David Laws: I am grateful to the Chancellor for giving way. If the assessment of the five economic tests, which must take place before June of this year, shows that Britain has not met them, will that rule out a referendum on the euro for the rest of this Parliament?

Gordon Brown: We have been over this ground before and I am not going to pre-judge the assessment. It will set out the facts clearly, and the hon. Gentleman can make his own judgment afterwards.
	I shall give full details of the updated figures on economic growth when we come to the Budget, but I can tell the House that last year, by contrast with growth in Germany of 0.2 per cent., in Italy of 0.4 per cent., in France of 1 per cent., and in Japan of minus 0.3 per cent., the economies of north America and Britain were the fastest growing of the G7 countries, as was stated earlier. So despite the events that have brought the first synchronised world slowdown, the Opposition are quite wrong to claim that we are not well placed to cope with it. Only a few days ago, the shadow Chief Secretary said in an intervention that we were facing likely recession and events analogous to the late 20s and early 30s, but I should tell him[Interruption.] I ask him this: is he really saying that we face events analogous to the 20s and 30s? [Interruption.]

Mr. Speaker: Order. The Chancellor must continue.

Gordon Brown: I wonder whether the shadow Chancellor might allow the shadow Chief Secretary to have a higher role in the next debate. It is always illuminating to listen to his words. When Conservative central office had to explain his earlier intervention, it defended him not as a politician, but as a City expert giving his views.
	In 2001, the UK was the fastest growing member of the G7. In 2002, with the north American countries, we were also the fastest growing. The Bank of England inflation report issued today states that, even before the effect of the recent interest rate cut, it expects growth to be 2.5 per cent. this year. Two underlying fundamentals matter if economic growth is to be sustainedthat is why the shadow Chancellor's analysis is wronginflation and stability. Past Governments have been unable to act during a world downturn because inflation was too high and interest rates could not be reduced. Inflation was 6 per cent. on average, although it rose to 10 per cent. when the shadow Chancellor was Secretary of State for Employment. Under the Labour Government, even in the 1990s, inflation has averaged 2.3 per cent. Every year, we meet our inflation target. We shall continue to do so and we shall continue to exercise discipline in the settlement of wage claims.
	As a result, we have achieved lower mortgage rates than those under the previous Government. They averaged 11 per cent. under the Conservatives, but only 6.5 per cent. under Labour. After all the shadow Chancellor's allegations, it is interesting to note that, over the last five years, 693,000 more people in England alone have become owner-occupiers.
	Living standards have risen substantially. Despite the fall in equity markets across the world, total net household wealth is still up. Despite oil and other problems, we have achieved not only low inflation and low interest rates, but low unemployment. The figures that I read out today are not the only important ones in that regard; there are 600,000 vacancies and they are in every regionunlike the situation in the late 80s. Because of the new deal, which the shadow Chancellor would scrap and abolish, we have achieved the lowest long-term youth unemployment since records began. I urge the Conservatives, in their review of Government spending, not to abolish a new deal that has given hope to hundreds of thousands of young people throughout the country.
	It is because we understand the slowdown in world trade and its impact on the stock exchange that, far from being complacent, we have seen interest rates come down, and small business corporation tax has been cut to 19 per cent; this spring, we are abolishing stamp duty for property purchases in disadvantaged areas; and tomorrow, because I believe that a consensus can be reached on measures that will help Britain to make the most of opportunities when the upturn in world trade takes place, we shall meet the CBI to follow up my meeting with Digby Jones and the joint note that we prepared.
	Building on the cuts in corporation tax that we have already achieved, on the cuts in capital gains tax, from 40p to 10p for two years, and on the permanent capital allowances that we introduced, we shall examine investment incentives, especially in the venture capital sector. Building on the small business tax, which is down to 19 per cent., we shall examine how much more we can do to encourage enterprise in every area of the country. Building on the successful research and development tax credit, we shall examine measures for innovation. Building on the employer pilots for greater training and skills for the modern work force of tomorrow, we shall publish a skills strategy later this year. Building on the flat-rate VAT system that we are introducing in April, we shall attempt to do more to encourage flexibility in the economy, including labour market flexibility where there is indeed a case for more conditionality and compulsion in the new deal for the unemployed. I believe that we shall have support throughout the country for the measures that we are taking.
	How different from the days of the early 1990s under the Conservatives! Then, when the shadow Chancellor was one of the architects of Conservative economic policy, unemployment went up by 1.4 million. Inflation was 10 per cent. Interest rates went up to 15 per cent. The record is undeniable. When there were difficult world conditions in the early 1990s, Britain did badly under the Conservatives, yet in the present difficult world conditions, Britain is doing well under Labour.
	When I hear the shadow Chancellor's pronouncementswith no hint of embarrassment at his past recordon pensions, tax, jobs and public services, are we not entitled to remind people that, on pensions, the right hon. and learned Gentleman was the City Minister at the time of pensions mis-selling; that, on tax, he was the poll tax Minister and described the poll tax as clear, simple and fair; and that, on jobs, he was the Employment Secretary when we lost so many jobs in two years? On public services, of course, he was Home Secretary when crime doubled. As Home Secretary, the right hon. and learned Gentleman famously coined the phrase prison worksI suppose it did, for a number of his former colleagues.
	We have taken the necessary action not only on monetary policy but on fiscal policy. In that area, too, the shadow Chancellor has misunderstood what it is right to do for a modern economy. In 1997 and 1998, in a period of growth, we actually froze spending. When others, including some of his colleagues, urged us to spend the proceeds22 billionof the spectrum auction, we paid off debt. We deliberately ran up large surpluses in periods of higher growth and, in one year, we cut more debt37 billionthan in all the years from 1945 to 2000.
	Let us make some comparisons. Debt is 31 per cent. of gross domestic product, but it is 45 per cent. in the United States of America; it is 47 per cent. in Germany, 55 per cent. in the euro area and 70 per cent. in Japan. As a result of cutting debt we have lower debt interest payments as a share of national income than at any time since 1915 and we can afford to take the action necessary in a period of low growth for the world economy. It is because our fiscal rules are set for the long term and because we paid off debt during times of high growth that our fiscal policies can adjust to the economic cycle.
	The shadow Chancellor says that the position

Peter Tapsell: rose

Gordon Brown: I cannot resist the hon. Gentleman.

Peter Tapsell: I am grateful to the Chancellor.
	The right hon. Gentleman is talking about his fiscal policy, but the great fault of his policies throughout his chancellorship has been the mismatch between his fiscal and monetary policies. We see that clearly at present when his Monetary Policy Committee is reducing interest rates just as he is about to put up national insurance. It is illogical for fiscal and monetary policy to operate in different directions.

Gordon Brown: I have a great deal of time for the hon. Gentleman, mainly because he attacks his party more than he attacks ours. However, may I remind him of what he said in the House of Commons, just after our announcement of rises in public expenditure? He said that
	the Bank of England will raise interest rates still higher, and that . . . will force up the exchange rate of sterling against the euro.[Official Report, 18 May 2000; Vol. 350, c. 443.]
	Neither has happened.
	For fairness, we should consider the fiscal policy alternatives being offered by the other parties. The

Matthew Taylor: Will the Chancellor give way?

Gordon Brown: I am happy to give way to the other shadow Chancellor.

Matthew Taylor: At a time when the Chancellor is asking everybody to pay more in order to invest in health and education, which is right, is he happy that the Inland Revenue disposed of its property to a company based in a tax haven in Bermuda in order to reduce costs to the Treasury?

Gordon Brown: I am grateful to the shadow Chancellor for raising that point. His hon. Friend the Member for Yeovil (Mr. Laws), who is a member of the Treasury Committee, has been giving radio interview interviews on the matter. The report of the Select Committee will be studied in great detail by the Treasury. We have made a number of changes as a result of what we already know. We shall respond to the Select Committee and take whatever action is necessary. As a result of that, we do not believe that such a situation will be able to occur again.
	The hon. Gentleman's intervention allows us to focus on the policies of the Liberal party. Conservative Members, too, will be interested in that. As we know, for the past 10 or 20 years, the Liberals told us that we needed more public spending to deal with every problem that we faced. However, I have a letter written by the shadow Chancellorthe one who lives in Truroto Liberal Democrat MPs. The letter is about Alternative Budget 2003; it is dated 8 January and begins: Dear Friends. The hon. Gentleman sets out views that we should share with every elector in every part of the country. He wrote:
	Unlike recent years, the budget proposals cannot simply be based on our past programme of tax increases . . . We have already agreed at shadow Cabinet to start from the premise that the Government are now putting in vast real terms expenditure increases . . . simply proposing further spending . . . rises at this stage of the Parliament is unrealistic.
	I am grateful for that private, if belated, acknowledgement of what we are doing to make public services

David Laws: rose

Gordon Brown: The hon. Gentleman may want to be shadow Chancellor, but I shall give way only to the shadow Liberal Chancellor on this occasion. The Liberal Democrats should forget every promise that they have made to groups of pensioners and others over the past few years. They should drop their offer to spend billions on education, because it is unrealistic. What happened in the first few days of this month? Press releases issued by members of the Liberal Democrat shadow Cabinet and others said that more money was wanted for teachers' pay, and referred to a derisory increase; and that there should be more bonuses for members of the armed forces; more beds for care homes after chronic Government under-investment; more housing for key workers; and more for the Post Office, because 2 billion was just sticking plaster. Those were the press releases of just a few days from the Liberal Democratsthe party that is supposed to believe in freedom of information.

Eric Forth: On a point of order, Madam Deputy Speaker. Is it not the normal courtesy for speakers, whether on the Front Benches or Back Benches, to address the Chair? Is it not totally discourteous to yourself, Madam Deputy Speaker, when the Chancellor persistently turns his back on you?

Madam Deputy Speaker: That is the normal courtesy but not one that is always followed by right hon. and hon. Members in all parts of the House.

Gordon Brown: Liberal Democrat Members should tell their constituents that which they have said among themselves in privatethat they cannot make additional public spending commitments and that it is dishonest to do so. They should return to their constituencies and prepare to tell the truth.

Matthew Taylor: The Chancellor has revealed nothing by saying that Liberal Democrats welcome the Government's belated spending increases. We will lay out our alternative. We do not believe that the Government are spending their money well. Just today we discovered that thousands of old people are blocking hospital beds much needed for treatment because the Government are overseeing cuts in private nursing sector provision. It is possible to spend the money better than the Government are doing

Madam Deputy Speaker: Order. That was a lengthy intervention.

Gordon Brown: We face the next local elections and the Scottish and Welsh parliamentary and assembly elections with the nationalists proposing to cut spending, the Conservatives proposing to cut spending massively and the Liberals unable to say, as they always have done, that they would spend more. That is a welcome tune and welcome honesty from the Liberal Democrat party, and it should be explained to voters in every constituency.
	Conservative Members said that they would not make any public spending commitments while in Opposition but would wait until they had evaluated the circumstances, yet at the Conservative party conference, among the 20 commitments to public spending was one, not to the national health service, but to private health care in this country. The first priority of the Conservatives as set forth by their shadow health spokesman is full tax relief for people taking out private health insurancea policy that Nigel Lawson, when at the Treasury, rejected as a wasteful use of public money.
	If Conservative health priorities, whether in Folkestone or elsewhere, are to prefer private health care funded by tax relief, with all the deadweight costs to the NHS, I do not think that the shadow Chief Secretary's review can yield anything but disaster for the British people. The Government are running the economy in the interests of all, not a few. The Government are running public services for the people. The Government believe in the health service. I commend the amendment to the House.

Matthew Taylor: The Conservative party called the debate, so it is right to begin by commenting on its extraordinary proposition. Anybody reading the Conservative motion could conclude only that part of the Conservatives' proposals is a tax cut and a cut in public spending to go with it. The motion condemns current policy and the money that is to be put into the health service and education.
	The Conservatives say that the problems of the British economy are predicated on tax levels under the present Government. However, the shadow Chancellor cannot or will not give any indication of Conservative tax and spending cuts. We heard not a single proposal for a tax cut from the shadow Chancellor, who says that the problems of the British economy are built on tax. Neither did we hear a single proposition for a cut in health or education spending.

Liam Fox: The hon. Gentleman's colleague and spokesman on health recently told the House that the Liberal Democrats would increase health expenditure through a new tax. Will that tax be set at such a level that health expenditure would be lower, the same or higher than it is currently?

Matthew Taylor: We welcomed the Government's increased taxes and argued that national insurance should pay for investment in the health service. We do not trust the present Government or future Governments to ensure that the extra tax will continue to go into the NHS, so we said that we would dedicate national insurance to the health service, ensuring that in future it will share in this country's increasing wealth, which it failed to do for many years in the past.

Liam Fox: Will the hon. Gentleman answer my question?

Matthew Taylor: I have just said that we welcome the Government's expenditure and will make sure that it is dedicated to the NHS. I have not finished answering. I have a question for the hon. Gentleman: last year, he told the BBC that he conceded that taxes might have to rise for the NHS. He was immediately slapped down by his party leader, who insisted on taking him through a vote against increases in NHS funding. We know that the hon. Gentleman's position now is to spend billions less on the health service. Alternatively, he intends to raise the money by introducing charges for NHS operations. That is the position that he articulated before the last general election, and he has not said that he was wrong.

Liam Fox: I asked the hon. Gentleman a simple question. The Liberals say that they will raise a health tax in a different way. Would that produce less, the same or more money than the Government are currently spending on health?

Matthew Taylor: The hon. Gentleman was not listening. I have said several times that we welcome the extra money going into the NHS. We do not believe that spending will rise from 45 billion under the Conservatives to more than 100 billion by 2008. Neither do we believe that it would be appropriate to argue at the moment for extra money. The issue is whether the money is well spent.
	The hon. Gentleman opposed spending increases. Presumably he wishes that the Government had stuck to the funding plans in place when the Conservatives left officenot 1 billion or 2 billion less for the NHS but tens of billions. There would have been less for doctors, less for nurses and less in his constituency. We know that, instead, he wants more and more people to be forced to pay for private operations or to contribute to the cost of their operations. How do we know? Before the last general election, he was honest enough to say so. The Conservatives do not offer a single policy now. They have gone quiet. Theirs is a hushed-up policy. They make lots of criticisms but have nothing to say.
	The fantasy offered by Conservative Front Benchers is irrelevantno wonder their own focus groups laugh at any mention of the Conservative party. The Conservatives have no coherence and do not have the courage to spell out their alternatives because they are so unpopular.
	The problem facing the Chancellor is whether he has a policy capable of delivering the changes for which he argues. The Monetary Policy Committee's decision to cut interest rates by one quarter of 1 per cent. has thrown the state of the British economy into sharp relief.

John Bercow: On a point of order, Madam Deputy Speaker. I seek your guidance. Is there any known precedent for a Front Bench spokesman addressing the House, which the hon. Member for Truro and St. Austell (Matthew Taylor) is now doing, without a single Back Bencher of his party being present to support him?

Madam Deputy Speaker: That is not a point of order for the Chair.

Matthew Taylor: The Conservative party has a tiny proportion of its Back Benchers present. [Interruption.] It suddenly has five, but a moment ago it had three. No doubt the Tory Whips will bring in a few more, but despite the fact that this is their debate Conservative Members have not even bothered to turn up. The hon. Gentleman, who resigned from the Conservative Front Bench in despair over their policies, presumably agrees with much of what I am saying and should perhaps refrain from intervening. [Interruption.] The Whips are doing a good job, because Conservative Members are pouring inthere are now five of them.

John Redwood: Does the hon. Gentleman think that it is right that there are now many more administrators in the health service than there are beds, or does he think that we might be able to save some money on the way in which the NHS is administered?

Matthew Taylor: The right hon. Gentleman may not have noticed, but although the Government took too few decisions about investment one of their early decisions was to get rid of the extraordinary bureaucratic architecture of the Conservatives' internal market in the NHS, so as to cut the number of bureaucrats and put more staff on the front line. Liberal Democrats welcomed that. Perhaps he should spend a little more time studying the failures of the last Conservative Government if he wishes to make such points.
	The Chancellor's optimism looks increasingly delusional. He is in denial about the state of the economy. Today, the MPC cut its growth forecast, partly because of uncertainty over Iraq but partly because of collapsing UK investment. The concern is that a Chancellor who will not admit the problems of the UK economy will never introduce policies to correct them. If we are to believe the Chancellor, Britain is racing ahead of the rest of the G7 and is a beacon of success in a world economy clouded with difficulties. However, it is not only the world that is at fault. Our economy has been dangerously split between a manufacturing sector in deep recession and a buoyant, if now slowing, service sector, fuelled by rising debt that even the Governor of the Bank of England has described as unsustainable. The overvaluation of the pound has hit every company that competes with imports or exports. The 200102 manufacturing recession was the longest since 1945 and the deepest since 1981. In 2002, we had the largest trade deficit ever.
	The Chancellor's response is to say that we should expect that at a time of worldwide economic difficulty and uncertainty, but the manufacturing recession is not simply a symptom of a world downturn, as a few international comparisons make clear. UK productivity growth, which the Chancellor originally set as the benchmark for his chancellorship, has been dismal since 1997 at little more than half the average rate since the 1960s and well behind that of our competitors. We have had lower productivity growth in this cycle than in previous cycles. Output per job has increased at an average annual rate of 1.4 per cent. since the mid-1990s and output per person has increased by just 1.2 per cent., compared with average productivity growth of just over 2 per cent. since the 1960s.
	The UK failed on seven of the 11 targets that the Government set for productivity growth. Of the four successful measures, two were our performance as measured against Japan and two as measured against Germanyhardly difficult benchmarks to reach on recent trends.

Andy Burnham: In his determination to paint a picture of doom and gloom, the hon. Gentleman is being a touch selective with the facts. He mentioned today's announcement by the MPC, but would he care to comment on another announcement made todaythe unemployment figures?

Matthew Taylor: Unemployment figures have fallen today, but that is due only to marginal growth in the retail and hotel sectors and substantial growth in Government employment. Manufacturing employment has fallen by 500,000 since 1997. Over the past year, falls in employment in agriculture, manufacturing, other production and financial and business services have been joined in the past three months by falls in employment in other service sectors. The only major economy to suffer worse falls in manufacturing employment than the UK over the past year has been Japan. Moreover, the UK suffered a larger fall in manufacturing output in the past year than France, Germany, Italy, Japan and the USA. It is the hon. Gentleman who is being selective with the figures.

Andy Burnham: Is the hon. Gentleman really saying to the 250,000 extra people in work, compared with the beginning of last year, that their jobs are not worth having?

Matthew Taylor: What about the people who are losing their jobs in manufacturing companies? What about the decline in investment, which tells us what will happen to employment in the future? Astonishingly, in the past 18 months, British investment has collapsed faster than it has in the supposedly stagnant economies of France, Italy, the USA and Japan. According to the most recent figures, investment is falling faster than it is in Germany. In fact, the fall in UK investment is the worst since records began.

Kali Mountford: The hon. Gentleman is being selective in the figures he is using to expound his case. Why is he failing to expose the massive job losses that have been experienced across the world, which are much greater than any that we have experienced in the UK? The issue of manufacturing does need to be addressed, but it is only fair to say that job numbers in this country have risen and continue to rise year after year, compared with the eurozone, the OECD and Japan. The hon. Gentleman pretends that Japan is the only comparison, but he is skewing the figures.

Matthew Taylor: I have given the figures on investment, manufacturing employment and other employment sectors, and I have acknowledged areas in which there has been some growth, but let us consider what underlies that growth. While the internationally exposed sectors of the UK economy are suffering, it is true that the service sector has increased as the housing and consumer debt boom continues. That allows the Chancellor to point to employment figures and GDP growth figures that are better than those of our competitors. However, as the Governor of the Bank of England and everybody else who has considered the matter have concluded, that growth is unsustainable. The economy cannot indefinitely sustain growth based on the fact that debt is rising faster than wealth or incomes. That is plain to everybody. We cannot continue to increase our borrowing faster than the economy grows, as we have done in recent years.
	Without rising debt, the British economy would look less like the best among the G7 and more like the sick man. Investment is falling faster, manufacturing is falling faster and our share of overseas investment is falling faster than in other economies. On what measure, therefore, does the Chancellor claim that the underlying economynot boosted by rising debt and increasing consumption by the British consumeris doing well? It is not productivity or long-term investment.

Adam Price: The figures for job creation mask a shift from high-wage jobs in manufacturing to part-time, lower-wage employment. That has hit especially hard the heartland manufacturing areas such as the one that I represent and those that many Labour Members represent.

Matthew Taylor: The hon. Gentleman may be right, but the biggest concern is that everybody will be affected. If the fast rise in debt, fuelled by house prices, stopsit is bound to stop, because it is unsustainable in the long termthe economy will not be underpinned by investment in business that could earn money in the long run, not only to deliver the standard of living and jobs that people need but to deliver the Chancellor's plans for investment in health and education.
	It is worth looking internationally, because when the MPC cut interest rates again there was some criticism that the European Central Bank did not do the same. The truth is that UK real interest rates are substantially higher than those of our competitors, including our European ones, while investment is substantially lower. Our high interest rate in real terms keeps the brake on investment and keeps the pound uncompetitive.
	The MPC has cut interest rates to help manufacturing and investment. Unlike the Chancellor or Labour Members, it has shown itself willing to face the problem. However, the Bank of England has one golf clubinterest ratesto deal with one objective: inflation. It does an exceptionally good job in that respect, but it is the Chancellor's job to deal with the two-speed economy. He is so busy blaming everything on the rest of the world that he will not acknowledge the peculiarly British problem that this country faces.
	For mortgage payers, of course, the news looks good. Interest rates are down, and another cut may be likely if the gloomy economic news continues. However, the Bank of England decision is a warning shot for householders, too. It implies that the MPC now believes that the threat from collapsing business confidence and investment outweighs the likelihood that house price rises and debt growth will continue to fuel the economy. In other words, the Chancellor may soon find himself with no clothes.
	The implication is clear. Not only are house prices likely to go off the boil, in the MPC's view, but there is a risk of a downturn. If that leads to rising unemployment and falling consumer confidence, house prices could easily to start to fall. At that point, the rise in consumer spending will dry up overnight. There may be a return to negative equity and the one thing that is supporting growth in the British economy will have disappeared.
	Over the past few years, when world growth sustained the British economy, the Chancellor missed the opportunity to take action to boost investment and productivity. He talks a lot about it, but he must know that his policies have failed because he can read the figures exactly like the rest of us. The record on productivity is catastrophically bad, as is the record on investment compared to that of our international competitors.
	Of course, the Chancellor is right to say that inflation is low, which was not the case in the 1980s, and that that has allowed interest rate cuts to take some of the strain of the problems affecting the economy, but even with the interest rate cuts the picture remains unbalanced. Falls in the prices of goods are offsetting 5 per cent. inflation in services. Interest rates alone cannot tackle the wider problems in the UK economy. We need the Chancellor to take action in his Budget to tackle the problems that have made the two-speed economy worseproblems largely inflicted by the Chancellor in the first place.
	First, he should stop adding more measures to complicate the tax system, and start simplifying it instead. The increase by one third in the number of tax complications since he took office has left business chasing accountants, while investment and productivity growth, supposedly encouraged by the various tax wheezes, has slumped. Productivity in the UK is dismal, and is growing dismally compared to our competitors. The Chancellor's micromanagement makes it worsea tax complication here, a new piece of bureaucracy there, centralising targets everywhere. We need a Chancellor who meddles far less. It is time this Chancellor got off the back of business, because UK plc will not succeed if it is chasing tax breaks and fighting red tape.
	The Chancellor also needs to take the exchange rate issue seriously. I was very pleased to hear today's announcement that we will get a report on the exchange rate issues associated with joining the euro. That is overdue, and it is a fundamental part of the question of euro entry.
	The pound has persistently been in the range between Euro1.50 and Euro1.60. Although it is lower than it was, most economists reckon that it remains uncompetitive, and, worse, there is no confidence in industry that the recent fall against the euro will be sustained. The pound is now very high against the US dollar. That represents a double whammy for British exporters. No wonder Britain's share of inward investment in Europe has slumped from 28 to 16 per cent. since the euro was launched, while the eurozone share has risen. Again, that must, in the real world, be a concern for the Chancellor, even if he will not admit it here.
	We already know from experience of the past few years that the merest mention by the Chancellor of the possibility of euro membership drives down the level of the pound, because almost everyone thinks that the pound is seriously overvalued. A more competitive rate would be needed before we could join the euro.
	A positive assessment of the five tests may bring the pound down to more reasonable levels. If we joined the euro, it would permanently remove the exchange rate risk for more than half of our manufactured exports. With investment in the UK slumping, that is no longer a theoretical issue.
	Those who do not want euro membership, and believe that we should put up with the fluctuations in exchange rates with the EU, our major home market, should provide some explanation of their alternative strategy for tackling a problem that has caused many of the manufacturing job losses600,000 of themthat the Conservatives have described. I trust that when the Chancellor makes his assessment and subsequent announcements, he will acknowledge that the question goes beyond joining the euro. If he concludes that joining would not be right at this time, he must set out a strategy for dealing with exchange rates in the long term, in a world where speculation seems to be the driver of exchange rates, not underlying real values. Britain has lost hundred of thousands of jobsprobably millionsin the recessions of the early and late 1980s and now again in manufacturing. On each occasion, the pound has been very high compared with our major competitor currencies.

John Bercow: Giving up British monetary policy in return for exchange rate instability against the dollar and the yen is not the height of economic wisdom, but will the hon. Gentleman say what assessment he has made of the effect of the rigidities of the planning process and of the Ofsted inspection system on the inadequacy of affordable and available child care in this country?

Matthew Taylor: I am not sure that the hon. Gentleman will find any solution to the exchange rate problems in that, but since leaving the Front Bench he has become keen on a change in the Tory leadership. He would prefer to have the right hon. and learned Member for Rushcliffe (Mr. Clarke), the former Chancellor, as leader of the party. I remind the hon. Gentleman that the right hon. and learned Gentleman agrees with me about the exchange rate. He definitely does not share the hon. Gentleman's view on the matter. If there is a change in Tory leader, the hon. Gentleman may still not find himself invited back to the Front Bench.

John Bercow: On a point of order, Madam Deputy Speaker. Is it in order for a Front-Bench spokesman so to suffer from short-term memory problems that he thinks a reference to the planning process is about the Tory leadership?

Madam Deputy Speaker: I am pleased to say that that is not a point of order for the Chair.

Matthew Taylor: I want to focus on the Government for a few final moments.
	The Chancellor understands that unsustainable increases in consumer debt cannot save his spending programme for ever. He talks about trying to boost investment and productivity, and I share his determination to do so, but I cannot share the prescription that he has laid out over recent years. The micromanagement of the tax system and the attempts to introduce tax breaks here and there to achieve the targets that he has set have failed demonstrably. The Chancellor needs to recognise that.
	Britain needs to earn the money to invest in hospitals and schools. The Chancellor's strategy will not deliver that if he continues to allow all the internationally exposed sectors of the economy to decline. He cannot expect the MPC alone to deal with the wider issues through interest rate cuts, as he knows full well.
	The first step on the road to recovery is to acknowledge one's problems. The Chancellor would do well to acknowledge some of the real problems in the British economy that are apparent to all but which are not shared by our competitors. Over the coming months, the Chancellor will be forced to acknowledge those problems. It will look far better for him if he admits as much and acts to tackle the problems before he is forced to do so.
	The Conservative motion refers not only to investment but to delivering public services. The Conservatives failed entirely on health, education, housing and transportthe list is comprehensive. The Government are now making much-needed investment, but they need to decentralise and to let go of the controls. When I hear Ministers describe decentralisation as handing down targets to hospital administrators for the delivery of national targets set by Ministers, I realise that they do not understand what decentralisation means at all.
	Decentralisation is not setting national targets for local delivery, but allowing local people to set their own targets for their hospitals and schools so that they can design the best services for local implementation. [Interruption.] The Chancellor says that that is what he says, but it is notline after line in his speech is about the process of centralised controls, PSA targets and the rest of it.
	I simply do not believe that Ministers in Whitehall, second-guessing those on the front linedoctors in hospital wards or teachers in classroomscan ever deliver effectively the investment that the Government are now making. Ministers have to be willing to let go. In some cases, they have to be willing to allow local failure to show how things can be done better, just as they need to allow local successes to show how things can be done better because, just possibly, Ministers may never have thought of them. That is the way to deliver successful investment, and it is what the Chancellor needs to do.

Phil Hope: This is supposed to be an Opposition day debate, but I am struck by the absence of the Oppositiononly four Conservative Members are in the Chamber. Still, that is up to them, I suppose. I had to check the date on the Order Paper because the motion has a lot more in common with the circumstances in which we found ourselves in the 1980s, rather than 2003. In the 1980s, the inflation rate was 10 per cent. for more than four years and the interest rate was at 15 per cent. for a year. Millions of people were unemployed, and millions more were on poverty wages. That was the state of the economy and public services then, not now.
	The Conservatives have not learned the lessons, as we heard earlier from the shadow Chancellor. Their sole economic policy now appears to be to slashto use a one-syllable word, as he saidpublic spending by 20 per cent. That is interesting, so let us just think about the figures. The statistics do not give the real picture of what life would have been like under the Tories if that kind of policy had been put into practice. The shadow Chancellor talked about being in a parallel universe. Let us imagine a day in the life of a Corby pensioner if the Tories had been in power and put in place their 20 per cent. slash in public spending.
	Let us imagine that pensioner as she gets up in the morning and switches on her television. She will probably have to get rid of her telly because there is no free television licence under the Tories, as there is with the Labour Government. She leaves her cold flat because there is no 200 winter fuel payment a year, as is provided by the Labour Government. She goes out to catch a bus to visit her grandchildren, but she has to stand at a vandalised bus stop in the cold, waiting for a dilapidated bus that is probably running late because, unlike now, the Tories would not have put 1 million into Corby's urban bus challenge, which repairs bus stops, puts new buses on the roads and ensure that fares are affordable.
	When the pensioner gets on the bus she now has a bus pass, provided by the Labour Government. However, 20 per cent. public spending cuts would have removed that pass from that pensioner if she had been living under a Tory Government. She would not have had a minimum income guarantee of 98.50. Her pension credit would not have been topped up from her late husband's steel pension because the Tories oppose the pension credit, and it would be cut by their 20 per cent. public spending cuts.
	The pensioner arrives at her daughter's house to look after her grandchildren, but she has to do so because there is no 3 million sure start programme, as there is in Corby at the moment, providing help for parents with young children, and there are no nursery places for three and four-year-olds because the Tories would not match our pledge on that if they imposed their 20 per cent. public spending cuts.
	While mum is at work, the pensioner decides to give her children some lunch when they come home from school, but, unfortunately, there is not enough money in the house. Child benefit was frozen under the Tories. She would not have the child care tax credit, the working families tax credit or the child tax credit, which is being introduced this April and which will put money directly into the pockets of poor families with children. Those families in Corby would have to live with the 20 per cent. public spending cuts.
	So the children come home from primary school for lunch with my Corby pensioner who looks after the grandchildren at home. They are not doing too well because the school classroom is terribly draughty, as there has been no upkeep and maintenance because of the 20 per cent. cut in public spending under the Tories. There are no books. There are no computers to learn on, and there is certainly no literacy or numeracy hour, which the Tories oppose and which has dramatically raised educational standards for primary school children during the past six years.
	The children have to keep their jackets and coats on because the council houses are incredibly draughty because they have not received the 3 million major repairs allowance that came to Corby council homes under the Labour Government. That money could not be spent with 20 per cent. public spending cuts under the Tories. So the pensioner says, I'd better take the children out. I'll take them for a walk to the post office. Of course, under the Tories, 120 million would not be going into the post office network to support it, so the local post office would have been closed. Rural post offices, in particular, were closing hand over fist when the Tories were in power, and more would close if they were able to make their 20 per cent. cut in public spending.
	On the way, the pensioner has to walk the children past the burnt out cars that litter the streets of Tory Corby. They would have to experience that because the measures and funding to deal with abandoned vehicles would not have been put in place or have been affordable under a Tory Government with 20 per cent. cuts in public spending. The new multi-agency teamwe call it Caspar in Corbywhich is successfully reducing antisocial behaviour would be swept aside because no one could afford to put the people on the streets to tackle that problem in Corby.
	The council would have had another round of cuts. In the last four years of the Tory Government, we experienced a 7 per cent. cut in grants to local government. With the Labour Government, we have had a 25 per cent. real-terms increase in support for local councilsnot a 20 per cent. cut in public spending, which the Tories would impose if they came to power.
	Of course when the pensioner gets back home, she meets her son-in-law who has just finished his temporary job on poverty pay because, under a Tory Government, there is no minimum wage. At least, there would not be one for small firms because that is the little trick that the Tories would pull if they ever got back into power. There would be no protection for agency workers because the Tories do not support any of the new regulations. There would certainly be no new deal for that young chap, who got his job under the new deal for the unemployed. The Tories opposed the new deal for unemployed young people every time that it was considered in the House.
	My Corby pensioner has toothache, and she would like to go to the new dental surgery. In fact, four new dental surgeries are being built in Corby to provide better dental care. With 20 per cent. public spending cuts, there would not be a single new dentist in Corby if the Tories were in power. Her day ends in misery, of course, when she gets a letter from her private health insurance company saying that she will have to find a little bit extra on the upfront excess to pay for her hip replacement. Under the Tories, there would be no hip replacements on the national health service; those operations would have to be done through private health insurance.
	Thankfully, that nightmare life of a Corby pensioner under the Tories has not happened, but it could happen if they got back into power and introduced 20 per cent. cuts in public spending. Instead, we have the most successful economic performance in Britain's history. We are seeing step-by-step improvements to public services, and all hon. Members can see the tangible benefits in our constituencies.

Ivan Henderson: The chief executive and chairman of my local health trust have just released its annual report, which states that the Government have put unprecedented investment into my local health service. They cannot understand the remarks of the shadow Chancellor when he says that the NHS is failing. He is accusing every person working in the NHS of being a failure. Does my hon. Friend share my view that that is disgraceful?

Phil Hope: My hon. Friend is right. The worst thing is that, to make a political point, the Opposition run down civil servants and public sector workers who are doing such a huge amount to bring about change. We gave the public sector a real challenge. We put in investment, but asked for reform to go with it. The police, teachers and nurses have risen to that challenge and are now providing better services with real outcomes. There have been cuts in waiting times and waiting lists, and better hospital procedures. When I go to my local hospital, I usually have to wear a hard hat because there is so much building work as new departments and services are put in. I am sure that that is true in my hon. Friend's constituency as well.

John Bercow: The hon. Gentleman talks about real outcomes. Will he tell the House why the Government have abolished their own 1998 target for the reduction of truancy and presided over a quadrupling in the level of assaults on staff in schools? Why?

Phil Hope: The difficulty that the hon. Gentleman faces is his failure to grasp

John Bercow: Answer.

Phil Hope: I shall answer the question in a second. The hon. Gentleman fails to grasp the consequences of his party's policies in schools in my constituency and, I dare say, in every constituency in the country. Teachers are now achieving results that they were never able to achieve before. They are achieving those results because of the investment that we have put into schools. We have backed head teachers with that investment and by giving them new powers and delegated authority, allowing them to control and run their schools to greater effect. As a result, less children are truanting

John Bercow: Fewer!

Phil Hope: I accept the hon. Gentleman's grammatical correction and thank him very much for it. It is the only thing that he has got right all afternoon.
	Fewer children in my constituency are truanting. Unlike the situation under the Conservative Administration, when truant children were simply roaming the streets, measures are now in place to tackle truancy and ensure that those children are identified, provided with an education and brought back into schools, withcruciallythe involvement of their parents. The parents are involved in the school contract to ensure that they, and not only the schools, take responsibility. As a result, less childrenfewer childrenare leaving school inappropriately and more children are back in school and achieving a higher educational performance.
	I will finish now as time is short.

John Bercow: rose

Phil Hope: I will not give way now; I have answered the hon. Gentleman's question.
	We have achieved a remarkable economic success. We are making step-by-step improvements to public services. However, there is another challengeto improve people's quality of life. The challenge for the Labour Government, now that we have the economy right and now that we are seeing improvements to public services, is to raise the quality of life for every citizen in our communities.

John Redwood: I have declared my interests in the Register of Members' Interests.
	So far in this debate, we have heard a most lamentable speech from the Liberal Democrat spokesman, the hon. Member for Truro and St Austell (Matthew Taylor). He should have died of embarrassment as he was wilting on his feet trying to deliver it. He could not answer a single intelligent questionand my colleagues raised severalon Liberal Democrat policy. He was left stumbling by the question on whether they wanted a massive increase in tax and waste, on top of the tax and waste that we have got used to from the Government. He was quite unable to explain how, if there were to be no further increases in expenditure under the Liberal Democrats, there could be any improvement in services. As we well know, they are quite unable to deliver such improvement when they are trusted in councils around the country.
	I wish to concentrate on the complacent and unconvincing performance of the downgraded Chancellorthe Chancellor of tax and waste; the Chancellor of boom and bust; and the Chancellor who came to power saying that he would bring about a great manufacturing renaissance, only to dash hopes, sacrifice jobs, and lead many manufacturers to a valley of tears.

Kali Mountford: If the Chancellor is complacent, will the right hon. Gentleman explain the complacency of the members of his own party? This is his party's debate, but where are they?

John Redwood: This debate has been extremely well attended on the Front and Back Benches for the interesting speeches that were given by my colleagues.

Matthew Taylor: But not for yours.

John Redwood: The Liberal Democrats have chosen to make this truancy hour, as we see from their absence from the Chamber. I am delighted to see the shadow Chancellor, my right hon. Friend the Member for Haltemprice and Howden (David Davis), in his place. This is a team and we are heartily sick of the way in which the Government team have let down this country, let down their pensioners, let down their taxpayers, let down their users of public services and let down, above all, their manufacturers.

Ivan Henderson: rose

John Redwood: Briefly and succinctly, I wish to highlight 10 massive errors of the Chancellor. First, this is the Chancellor of tax and waste. This is the man who has tipped so much money into the health service that we get no visible improvement at all in health care in my part of the world. Where has all the money gone? It is not buying us the nurses and doctors that we want; it is not delivering the extra operations; and it is leading to bed closures and shortages. There has been incompetence on an enormous scale from the Chancellor of tax and waste.
	The second great error of this Chancellor was to destroy the savings and pensions industry in this country.

Andy Burnham: Is the hon. Gentleman seriously suggesting that there has been no increase in the numbers of nurses and doctors, and no new NHS buildings and no improvement whatsoever in his local health service? I will look up the figures but I believe that he is wrong to say that. I would be grateful if he would be honest with the House.

John Redwood: What can be achieved in my local hospital is all too little because of the changes in the way in which the health service is managed and because of the shortage of money to deal with the falling productivity that is the hallmark of the health service under this Government.
	The Chancellor has a massive productivity crisis in the public sector and he has no idea what to do about it. The more targets and central controls that he heaps on the systems, the worse they become as local situations are undermined. I want more doctors and nurses, more treatments and more patient activity in my hospital. Despite the money, none of that is being delivered because of the fall in productivity

Kali Mountford: Will the right hon. Gentleman give way?

John Redwood: I have already given way rather generously and I wish to make some progress.
	I had moved on to pensions. The Chancellor tried to tell the House that a 5,000 a year stinging tax on pension savings would not be visible. He and the Prime Minister dared to say that, because the stock market was rising when that tax was introduced, all would be well and there would be magic moneypensioners and savers would be better off, and, of course, the Chancellor would be better off with his bags of gold swelling every day. As soon as the stock market started to fall, we saw absolutely nothing from the Chancellor by way of apology or adjustment to his policies.
	The Chancellor seemed so little to understand what he had done that he did not realise that there would be a stock market fall in company shares as a direct result of taking 5 billion off the people who had invested in those shares. The market was selling on 20 times earnings at that time. I do not know whether the Chancellor was aware of that or whether he understands it, but it meant that there was bound to be a 100 billion hit on share prices that were held by my constituents and the constituents of hon. Members on the Labour Benches through their pension and insurance funds. Either the Chancellor did not understand, or he did not give a toss. Either way, it is very bad news for the Chancellor of the Exchequer that he was so careless of the savings and future pension entitlements of so many people. Where is he now to apologise? Where is he now to start reducing the tax burden? Where is he now to help savers before many of them reach retirement with a fraction of what they were expecting from the hard-earned money that they had saved? People have been robbed by a rip-off Government and robbed by a rip-off Chancellor.
	The third error has been the Chancellor's failure to deal with the problems of manufacturing. Indeed, the Chancellor is the main problem for manufacturing. It is this Chancellor who has stung manufacturing by 15 billion a year through his extra impositions, controls and regulations. It is this Chancellor who believes that he can regulate, control and harry manufacturers, taking money away from them but mysteriously believing that that will do them no damage and that they will come up smiling and bouncing.
	When the Chancellor was in opposition as shadow Chancellor, his idea of a good evening out was to sit in the House of Commons Library puzzling over all the numbers coming out month by month from the then Government's statistical machine. As soon as he found a single bad numberjobs lost or manufacturing output not risinghe was on to it and would claim that it was a scandal and a disgrace. Why does he not read the figures now? Why does he not see that he has already presided over two manufacturing recessions? The second was long and deep, and some people believe that he will preside over a third if he survives long enough in office given all the current rumours. This is the man who has let manufacturing down, who has destroyed good, well-paid jobs and who has led to a crisis in our export industries, because he has damaged the productivity and competitiveness of those who make things in Britain.
	That leads me directly to the fourth huge error and problem with which the Chancellor has burdened us. It is a problem that he and his Labour predecessors as shadow Chancellor used regularly to complain about when Conservative Governments delivered more modest figures in terms of the problem than this Chancellor has done. I am talking about the balance of payments. It really takes the biscuit for someone who campaigned against any balance of payments deficit in the Conservative years not only to preside over, in the past year, the biggest bumper deficit in history but to say nothing of the fact that we buy 34 billion more of manufactured goods into this country, which was once the workshop of the world, than we are able to sell from it. That is the magnitude of the crisis that he has created in manufacturing.
	Many Labour Members have now gone quiet. They know that there have been factory closures and job losses in their constituencies. They are under pressure from their constituents to put that right, but they know that they have nothing to offer because the Chancellor does not care.

Several hon. Members: rose

John Redwood: I shall give way to the hon. Member for Preston (Mr. Hendrick) because he has not intervened.

Mark Hendrick: Does the right hon. Gentleman agree that consumers, and not the Chancellor, purchase manufactured goods? In fact, the Chancellor has done a great deal to stabilise the economy.

John Redwood: That was incredibly lame. The hon. Gentleman could not name a single thing that the Chancellor has done. I am glad that consumers are still allowed to make their own choices on some issues in this country, but I am sure that Labour is working on stopping that. When the Chancellor was in opposition, he said that he had all the answers. However, in government, he has adopted all the wrong policies. He is the man of taxation and regulation, so he is destroying jobs by his deeds. Lift the regulation, reduce the taxes and the situation would improve for many manufacturers.
	The next issue on which the Chancellor has fallen down is the euro. Does he not realise by now that joining a Germany mired in recession, joining a large area where one interest rate certainly does not fit all and hitching our fortunes to the continent of Europe where growth rates and productivity growth rates are far worse even than in Brown's Britain would be the last thing that we need to do? Should he not now lift the burden and uncertainty from business?
	One thing that the Chancellor could do today to make business a little happier would be to come to the House and say that he has decided that it would be quite wrong to destroy the pound and the separate controls over our economic life. He could say that business need not waste its time and money worrying about preparations and about whether the Government will hold a referendum. He could remove that uncertainty if nothing else.
	The next thing that the Chancellor has done that shows how disastrous he has been was his pathetic sale of gold reserves. It was a signal to the market. If one had been looking for a contrarian view, one should have immediately moved in and bought however much gold off the Chancellor that one could afford to buy. He managed to find and create the deep bottom of the gold market. He sold this country out; he sold it short; he got it wrong; and he has never apologised for the losses that he has chalked up.
	The losses to date are a mind-boggling 750 million. What could manufacturers have done with that sum if it had been given back to them as a tax reduction? What could my hospital and hospitals around the country have done with that money if it had been available to purchase enough nurses and doctors to get ahead of the productivity problem that the Government have created in the health service? This Chancellor decides that he can outwit the fund managers of the world. He sold the gold at the wrong price and, of course, he does not apologise. Britain is poorer as a direct result.
	The next issue is the telecoms industry. The Government inherited a marvellous telecoms industry that had been created by the previous Conservative Administration's privatisation, liberalisation and deregulation. Their policies spawned thousands of new jobs, many new products, a great increase in exports, a huge improvement in service and an extension of telephony services to many people who simply could not afford them under a Labour Government with a monopoly public enterprise system. This sector of the market was leading the growth and the boom that Labour inherited. What did the Chancellor do? He imposed a swingeing telecoms tax on the industry, charging them 22 billion simply to stay in business.
	I agree that that was very clever. The Chancellor wanted to maximise the take and he worked out exactly how to do that. He did that very well. However, he did not seem to realise that that would bankrupt half the industry, turn the other half into walking wounded, lead directly to huge job losses, slow down investment in new technology and extend the damage being done by the dotcom bubble bursting in the States. He made the problem more severe and more difficult in the United Kingdom. He decided to burst his own boom in the leading sector, and he did so dramatically with terrible results.

Ivan Henderson: rose

John Redwood: No, I wish to conclude, because many other Members wish to speak.

Ivan Henderson: What about rail privatisation?

John Redwood: The hon. Gentleman will be delighted to know that the next issue to which I shall turn is the railways.
	This Chancellor took a private sector company that needed a modest amount of Government assistance to deal with the very large requirements that the Government were heaping on it to improve safety and standards on the railways and, through bankruptcy and the development of a new type of companya third-way company, as they like to call ithe decided to waste billions of pounds of taxpayers' money that would not have been wasted if the Government had soldiered on with the system that they had inherited.

Kali Mountford: At the time of privatisationwhich was clearly a privatisation too farwhy did the right hon. Gentleman's Government not think more carefully about how it should be conducted? Why did they split the industry? Why did they make it unsafe? Why did they make it uneconomic?

John Redwood: We did not make it less safe than the nationalised industry that it replaced. Privatisation led to the great increase in ridership and usage of the railways to which Ministers often refer. They do not realise that they are contradicting themselves when they point out that element of success in the system that they inherited and that they then enjoyed in the good times. This Government bankrupted the private sector company; they decided to impose such strong requirements on the railway that it was not possible to finance it at the then rate; and they decided to tip at least 14 billion into an organisation only to discover that railway services are now worse than they were when they started the dreadful odyssey on which they embarked.
	The Government are wasting billions on the railways but commuters from my constituency of Wokingham still cannot get to work on time on a reliable service. The Government's rail regulator is saying that it will now have to cut services because, despite all the money, there is not enough to spend on the things that need doing. Despite all the money, the service is going backwards rather than forwards. The Government will rue the day when they bankrupted that company; they will rue the amount of money that is gobbled up by their new creature without it achieving good results.

John Bercow: Is not the ultimate evidence of the Government's chronic policy failures on Railtrack and of the disinformation provided to the House about such matters the reality that the right hon. Member for Tyneside, North (Mr. Byers), who was the Secretary of State responsible, scuttled off and resigned from office?

John Redwood: Indeed, the right hon. Gentleman had to do that. His policy was disastrous and, at times, incorrectly presented to the House and to those outside.
	That brings me to the Chancellor's and the Government's ninth catastrophic failure. If he wants to have a fast growing, modern and successful economy, he will have to learn that the first thing that he needs is a good transport system. Yet this Government have managed to combine big increases in public spending on transport with a massive failure of performance.
	This is the Government who now nervously await the introduction of the congestion charge in London, knowing that London has been brought to a halt by a combination of central Government misdirectives and a Labour Mayor whose one purpose in life is to stop anyone driving anywhere, whatever the hour, however much it might be necessary to take their tools to work or to travel at times when public transport is not available.
	Until this Government understand that a modern economy needs to let vehicle traffic get around as well as railways, until they understand that we need a massive increase in capacity of all types of transport, there is little hope of restoring the levels of growth that the economy once enjoyed, which are now slipping because of the dreadful policies of the present regime.
	That brings me to the tenth of my 10 points [Interruption.] Labour Members must be very relieved to know that I have limited my speech to 10. I could have done another 10.
	The tenth point I have chosen is the Government's strange view that third-way finance will ride to their rescue, that there is magic money in the private sector that can be attracted into public service without a cost to taxpayers. Again, they will rue the day. They will discover that many of the half-baked schemes they have constructed, starting with the London Underground, are badly thought through and will end up with enormous risk to the taxpayer.
	My right hon. and learned Friend the Shadow Chancellor is right. The 100 billion-odd of liabilities that are potentially already out there should be on the Government's balance sheet and should be clearly understood by the Government. Next time the Government should pause before signing some of these contracts, because there must be honest finance for these projects. If they are public projects, they will end up with higher taxes, and higher taxes mean a weaker economy.
	We desperately need a Government who will lift the burden of regulation, will start to concentrate expenditure on the people and things that are necessary and will hack away at the overgrowth and undergrowth of the political classes and the spin doctors, the administrators, the consultation experts and the great raft of colour brochures that this Government now churn out to substitute for proper policy and managing services on the ground.
	There is massive waste in this Government. I say to them: start to chop it out. Give the money back to the people, give the money back to business, and then things could start to grow again.
	The Chancellor has let the country down. He has robbed and pillaged the private sector. He has driven people out of work in manufacturing. He should be ashamed. He should apologise to the House.

Vernon Coaker: I shall be brief, to allow other hon. Members to speak.
	The debate is interesting because it shows that the Conservatives' tactics are to paint a picture of gloom and doom about our public services, to run them down and say that there has been no progress or improvement, whether in the health service, schools or anything else. Clearly, one of their prime activities between now and the next election will be continually to run down our public services.
	It is important to acknowledge that we face challenges and difficulties, and that improvements are needed in some respects; but if all that we do in this Chamber is deny the improvement in public investment and progress that we see in my constituency, we shall not serve our constituents particularly well. I shall highlight some of the improvements that have taken place in public services, in the economy and in employment prospects, without failing to recognise that there are challenges in our public services that we need to meet.

Michael Howard: I should like to remind the hon. Gentleman of one of the statistics to which I referred, which is that over the past two years spending on the national health service has increased by 22 per cent., but hospital treatment has increased by only 1.6 per cent. Does the hon. Gentleman deny those figures? I do not see how he can, because they come from the Government. Does he think that, in those circumstances, we should remain silent about them?

Vernon Coaker: I do not think that the right hon. and learned Gentleman should remain silent. What I am saying is that the Conservative party has clearly decided that in the run-up to the next election it will denigrate and run down our public services. The difference between us is that we are saying that we shall invest in and reform our public services, while recognising progress where there is progress and challenges where challenges remain. What we shall not do is say that the picture is of a complete mess and of failure.
	On the number of people out of work, to which my right Friend the Chancellor referred, it is too easily forgotten that a few years ago people like me and many others used to go on marches for jobs. We carried banners at huge demonstrations, where we said that there could be no dignity for any family, no self-respect for any individual and no proper attack on poverty in society if we did not move towards full employment.
	We too readily say that, whereas 3 million people were out of work, now the figure is less than 1 million. That reduction is a staggering achievement. It means that people have prospects in their lives. They have the possibility of inclusion, self-respect and dignity, which were denied them before. The reduction in unemployment in my constituency is a phenomenal achievement. In their welfare to work programme, the Government tried to tackle the problems encountered by people moving off benefit and into work caused by the benefits trap. Tax credits, the new deal and other measures introduced to deal with some of the difficulties have been a tremendous success.
	I am proud of our record on employment and the fact that a Labour Government have delivered huge rises in the number of people in work and huge decreases in the number of unemployed. That is one of the greatest social steps that can be taken to tackle poverty and give people dignity.
	In my local area, too, the increases in public spending have brought real benefits. It is clear from this debate that it is possible to take the Opposition's position. They can say that there is considerable waste, and considerable spending that should not be made, and that their policy is to reduce that spending by 20 per cent. because they think that it will deliver a better result. However, I must tell them that I shall not argue for a reduction in public spending when most people in my constituency are banging on my door calling for increased public spending. They want increases in the amount the Government are doing for their schools, hospitals, roads and transport. They believe not that there is over-investment in those services, but that the decades of under-investment in them led to the current problems.
	We all accept that it is not possible simply to plough money in and expect services to improve. Reform is needed alongside the investment. Equally, it cannot be said that reform on its own will deliver improvements. Investment must be coupled with reform if we are to see improvements.

John Bercow: It is a question not of denigrating the services, but of holding the Government to account for their policy failures, which make them worse than they would otherwise be. Will the hon. Gentleman tell the House, in response to the question that I posed to the Chancellor and that my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) has just posed to him, why NHS activity rates are rising at a rate of only one-fourteenth of the increase in NHS expenditure? That is the question; what is the hon. Gentleman's answer?

Vernon Coaker: We are investing in capacity to deal with some of the problems. As I understand it, the shadow Chancellor said that public services have been denigrated. He painted a picture of complete failure in which no progress or advance had been made, but we are making progressalthough I accept that real challenges remain. The hon. Member for Buckingham (Mr. Bercow) identifies the problem of capacity, but we cannot address that without investment. We certainly cannot do it by inflicting cuts.

Kali Mountford: Will my hon. Friend give way?

Vernon Coaker: If my hon. Friend allows me to finish, one or two of our colleagues will also be able to speak.
	My constituency of Gedling in Nottingham has new schools. Parkdale primary school has been rebuilt; millions of pounds of capital investment have gone into Arnold Hill school, Carlton-le-Willows school and Redhill school; and Arnold View school is to be rebuilt. There are new buildings at Arno Vale school; new classrooms at Burton Joyce; and a new hall at Seely church school. There are more nurseries, a sure start scheme and more teachers and teaching assistants. Colleges are expanding, and the Clifton campus of Nottingham Trent university is like a building site. Those improvements do not arrive out of thin air. They are possible only because of Government investment, and I am proud of that.
	Building is going on at hospitals, too. The Queen's medical centre has a new accident and emergency unit; a new breast cancer unit is being built at City hospital, which I visited last Friday; a new urology unit and a new haematology unit are planned; and a cardiac unit is on its way, as are new wards for the elderly. There are more doctors and nurses, and the Gedling primary care trust is working to do something about substandard health centres. Just for the record, Nottinghamshire now has more police officers than ever before.
	My central point is that the Government have invested huge sums in public services and we can see improvements at a local and national level. Of course it is necessary to have reform alongside that and to deal with some of the problems that investment brings, but there is a clear divide between those who believe that we can improve public services by making cuts and those who believe that we can do it by investment and reform. Another way would be to praise our teachers, doctors, nurses and police officers. We need to tell those people who work in our public services that we admire their work and understand the difficulties that they face. They need to know that we are proud of the progress that has been made.

Andrew Mitchell: It is a curious experience to follow the hon. Member for Gedling (Vernon Coaker), who represents the constituency that I represented for 10 years between 1987 and 1997. Although I recognise his sincerity, he has not answered the Opposition's case. Before I go further, I draw the attention of the House to my entry in the Register of Members' Interests.
	I hope to build on the outstanding speeches by my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) and my right hon. Friend the Member for Wokingham (Mr. Redwood).

Roger Casale: Will the hon. Gentleman give way?

Andrew Mitchell: No, I have barely started.
	I do not have a list of 10, but will comment on one or two of the points raised. Whatever else comes out of the debate, it must surely be the stunning complacency with which the Chancellor of the Exchequer accounted for the state of the British economy. Things started so well. I remember him saying, probably in song, that things could only get better. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) bequeathed a brilliant economic platform on which to build. The Chancellor did the right thing with the Bank of England and stuck to Tory expenditure plans. He also accurately read the Asian crisis, for which he was rightly praised in the House and the City, when so many commentators got it wrong. I have said a number of timesI like to be fairthat he has been a successful and good Chancellor. However, like so many before him, he sadly believes his own propaganda, and hubris and nemesis are setting in. It will not be many months before he is reviled by every hardworking taxpaying family for presiding over what is about to come.
	As the shadow Chancellor made clear, there are serious imbalances in our economy. Even the Liberal spokesman, the hon. Member for Truro and St. Austell (Matthew Taylor), made the dangers in the economy clear. A housing boom led to a 12 billion withdrawal of equity in the last quarter of last year. A consumer boom has taken place. The Confederation of British Industry has issued dire warnings not only about the massive increase in taxation, but about the massive amounts of regulation that are being ushered in every hour of every day. We also have Labour's tax on jobs, which starts in April. Those events are taking place when the stock market in Britain has fallen by nearly 50 per cent. from its height and our economy is in a dangerous state.
	I call on the Chancellor to announce that he will suspend the 5 billion a year tax on pensions. I do not expect him to abolish it, but it is doing a great deal of damage. Almost everyone agrees that it is vital to put more money into our pensions, but he is taking 5 billion every year. He should announce, at the latest in the Budget, that he will suspend that forthwith while the current economic circumstances prevail.

Andrew Love: That has been one of the Opposition's themes for years, but every time they are taxed with the idea of giving a commitment to re-introduce the 5 billion, they remain silent. What is the hon. Gentleman's view on that?

Andrew Mitchell: The shadow Chancellor of the Exchequer will make plain our position on taxation before and at the next general election. My point is slightly different, however. I am asking for a temporary suspension of the tax, which is causing such damage to British pension funds, while we allow the economy to recover.
	The Chancellor of the Exchequer has made things far worse. All the independent forecasters outside the House told him that his growth forecasts were wrong. Those people were rubbished and told that they had got it all wrong. Now it is they who are right and he who is wrong. Do we get any contrition from the Chancellor on his errors? We do not. Instead, we have to put up with the bombast, the guff about prudence, the puffed-up and stomach-churning lectures about his golden rules, and the ludicrous pseudo-intellectual speeches about the role of the public sector, such as the speech that he delivered last week to the Social Market Foundation.

Kali Mountford: rose

Andrew Mitchell: The Government blandly go on roaring along with their spending plans, but who will bail them out? Perhaps the hon. Lady will tell us.

Kali Mountford: It would be very nice if the hon. Gentleman could introduce some facts into the debate. He makes much about the forecasts. When did any Tory Chancellor get the forecasts right? Surely it is fair to refer to all the items in the Treasury Committee report that show that no one got the forecasts right, not even the independent forecasters. Let us get the facts straight.

Andrew Mitchell: I gave way in the hope that the hon. Lady would tell us who will bail out the Government. As she has not, I shall do it: it will be the long-suffering and greatly abused taxpayer. Had the Chancellor presided over such a failure as chairman of a public company, the company would have been forced to have a rights issue, the share price would have collapsed and no doubt the chairman and the chief executive would have been fired. Under the Government, however, the Chancellor will not be fired; he merely seeks a promotion next door.
	We have the odious spectre of a grinning Government spraying around taxpayers' money as if it were going out fashion. They are frittering away the golden inheritance that they got from my right hon. and learned Friend the Member for Rushcliffe and failing to take tough decisions on public service reform.
	I wish to make a few points about the six wasted years, the empty promises and meaningless sound bites that we have all had to put up with from this spinning Government. My hon. Friends will remember with affection the slogan, Tough on crime, tough on the causes of crime. Violent crime and gun crime have risen. In New York, crime is down by 62 per cent, but in Britain it is rising again. We were then encouraged to believe that the Government were going to think the unthinkable on welfare. They appointed a Minister who genuinely thought deeply about those matters, then fired him. Since then, the welfare budget has soared and the Government have had to reinstate benefit rules on asylum seekers coming into this country. They had torn into Conservative Ministers for imposing those rules, describing them as wicked, but six years later they have had to reimpose them.
	Then there was 24 hours to save the NHS. Waiting lists are still over 1 million, and we have heard the eloquent comments of my hon. Friend the Member for Woodspring (Dr. Fox) about the state of the health service. Government Members should think about the following statisticsurvival rates for prostate cancer in Germany are 68 per cent., but in this country, in my constituency and the constituencies of Labour Members, they are 44 per cent. As my right hon. Friend the Member for Wokingham said, spending on health has gone up by a staggering 30 per cent., whereas activityoperationshas gone up by only 2 per cent. In Scotland, Wales and Northern Ireland there is higher spending, but longer lists and worse cancer care.
	We were told throughout the 1997 election campaign that there would be no rise in income tax, which was a deeply disingenuous piece of spinning. Today, there are 1 million more higher-rate taxpayers, and the tax burden has risen from 37 to 42 per cent. I could go on and examine transport, but my right hon. Friend the Member for Wokingham has already done so extremely skilfully. In the past six years, public spending has risen by a staggering 111 billion or one third. That money has been removed in tax from hard-working men and women who have paid higher tax and got precious little back. That is the catastrophic effect of Labour's experiment in throwing tax money at unreformed public services.

David Wright: Does the hon. Gentleman agree that a key statistic in measuring economic success is the number of unemployment claimants in our constituencies? Is he aware that from 1997 to 2002 the number of claimants in his constituency fell by 33 per cent.?

Andrew Mitchell: There are two answers to that point. First, the hon. Gentleman knows that in Sutton Coldfield there is a tiny handful of unemployed people. He gave not a number but a percentage. Secondly, unemployment has fallen since 1997 because of the firm economic foundations that his Government inherited from their Conservative predecessors.
	Finally, the Government have flunked reform. They had the opportunity, and we have heard about their interesting ideas on private investment in education and foundation hospitals, but they are fettered by old Labour dogma. Even the Blairite think-tank Demos in its interesting pamphlet System Failure, published on 20 May last year, made it clear that those reforms are essential, but said that the Government have failed to implement them. They have failed to learn the lessons that Governments have had to learn since the second world war: government is too big. My hon. Friend the Member for Bromsgrove (Miss Kirkbride) pointed out in an intervention that a quarter of the workforce, or 7 million people, are now Government employees. There is micromanagement by politicians, who are using a 50-year-old model that simply does not work. There is no competition or choice, and there is bureaucracy, regulation and waste.
	Even the NHS says that 20 per cent. of its budget, or 10 billion, may be wasted, and there is serious capital under-investment in the health service because of the system. We have a poor service, and there is low morale among those who work in the NHS. Recent surveys show that a fifth of GPs say they want to quit and a third of teachers say that they want to quit within five years. The Government have failed to make reforms and have failed to learn lessons that have been learned overseas. If they cared to look at Denmark, Holland and Sweden, they would see that there is a free choice of school, whether public or private, which is paid for by the taxpayer. In Holland, 70 per cent. of schools are non-state owned; in France, a third of hospitals are non-state owned; and in Germany, 50 per cent. of hospitals are non-state owned. The eternal post-war truth that Government Members should have learnt is that choice and competition deliver for our fellow citizens.
	The Government and those on the Treasury Bench have forgotten those lessons. The Government are bent on an orgy of spending our hard-earned taxes, but they are unwilling to make that spending count by making fundamental reforms. They have been found out. Increasingly, they will find themselves paying a terrible price for wasting our hard-earned tax money, and frittering away and destroying the good will and opportunity that they clearly had when they came to power in 1997.

Kali Mountford: We have heard some deluded comments and nonsenseit is a case of collective false memory syndrome on the Opposition's part. I was going to give a brief speech, but as only one Opposition Member still wishes to speak, I shall allow myself a little more time. We have been presented with another rehearsal of the same ideas, but Opposition Members are blind to the truth. We have been offered a new opportunity to increase unemployment by 3 million; a new opportunity to cut nursing training places; a new opportunity for yet more privatisation. The cat is out of the bag. We have just been told that the way forward is to privatise, privatise and privatise again until everybody pays through the nose for what they are now getting free at the point of delivery. I cannot accept that Opposition Members truly believe that a mix of markets in public sector services would be more efficient or cost-effective or, indeed, deliver the services that people need when they need them.

Liam Fox: rose

Kali Mountford: I shall give way to the hon. Gentlemanit might be interesting.

Liam Fox: I believe:
	Choice mechanisms enhance equity by exerting pressure on low-quality or incompetent providers . . . Competitive pressures and incentives drive up quality, efficiency and responsiveness.
	I hope that the hon. Lady does too, as those are the words of the Prime Minister.

Kali Mountford: I hope that the hon. Gentleman is not saying that the vast majority of public sector workers are incompetent or unable to do their job. There is, quite rightly, a case for introducing measures to make a work force more effective, such as mechanisms for dealing with a teacher who is not delivering in the classroom, a nurse or doctor who is not treating patients well, or a police officer who is no longer fit for service. However, that is not what the Opposition are talking about. They are saying that a new infrastructure is needed for privatisation, as nationally delivered services are incompetent and incapable of delivering. The Wanless report, however, clearly showed that the NHS is the most efficient and cost-effective way of delivering services to the vast majority of people.
	I cannot imagine why the Tory Government in 1996 thought that cutting 7,000 nursing places could increase capacity in the NHS or improve standards. To improve nursing standards, we should give nurses a clear career path and incentives in their pay structure. They should have ways of demonstrating clinical skills so that they can have enhanced job satisfaction and improve delivery of services to patients.That is the sort of reform that we want. We do not want reform ensuring that one of part of the population gets one sort of service, while another partthose who can afford to paygets the cream of the services. The people who are in the middle and have managed to put away a little bit of money should not suddenly find that that money does not cover all the health provision that they hoped it would. That is not the sort of health delivery that I want.
	Nor do I want a mixed-market economy for education in which people get their children into classes of 12, 13 or 14 if they can afford to do so, while the children of people who cannot afford such provision end up in a class of 50 or 60 pupils at primary age. That is the situation that we inherited in 1997. It was not some sort of Utopia, but a nonsensical education system that did not deal with the basics. It was a system in which not one or two children came out of each school at 11 to contribute to illiteracy levels; in some areas, 25 per cent. of children were unable to read and write before they went into comprehensive education.
	How could we possibly expect a child to develop, grow and be able to gain some sort of advantage from their secondary education if we never got the basics right? Merely to consider a one year downturn in standards without looking at all six years under this Government and the year-on-year improvements in literacy and numeracy is simply ridiculous. Hon. Members talk about a 1.6 per cent. decrease this year, but let us have a look at the 25 per cent. increases in standards year on year.
	I am proud of pupils in my constituency, who have this year lifted standards beyond anybody's expectation. That has happened not only in well-off areas, but everywhere. Children who have a history of parents, grandparents, aunties and uncles being out of work now have the prospect of work. In my constituency, nobody leaving school in the past three years has been incapable of getting a job. That even includes people leaving education with special educational needs and disabilities. The new deal programme has ensured not only that the majority can get jobs, but that those who previously found it hard to be placed in a job can gain employment. We are now saying to employersthis is the sort of measure that the Opposition do not wantthat we will be fair to people with disabilities and find ways of ensuring that they get the same opportunities as everybody else.
	Of course, that is the so-called new red tape that we are all supposed to be throwing away. That red tape, which the Opposition hate so much, is the very protection that people need. Let us think back to the situation when we had the sort of Government who hated red tape and did not believe in the public sector. What did they say? They said that they would cut red tape, which would instantly mean cutting civil service jobs.

Roger Casale: Will my hon. Friend comment on the bombastic rant that we have just heard from the hon. Member for Sutton Coldfield (Mr. Mitchell), who was not gracious enough to accept my intervention or to remain in the Chamber to hear the next speech? He was gracious enough, however, to remind the House that he had been the Member of Parliament for Gedling between 1987 and 1997

Liam Fox: On a point of order, Madam Deputy Speaker. It is only fair to say to the House that I believe that my hon. Friend the Member for Sutton Coldfield (Mr. Mitchell) has told those on both Front Benches, both Whips and you that he is attending a Select Committee sitting.

Roger Casale: That may be the case, but I am sure that the hon. Member for Sutton Coldfield would have had time to accept my intervention. Indeed, his having to leave the debate after making his speech was perhaps even more of a reason why he might have accepted interventions.
	Will my hon. Friend the Member for Colne Valley (Kali Mountford) comment on whether the hon. Member for Sutton Coldfield lost his seat in 1997, as he reminded the House, because the verdict of the electorate at that time

Madam Deputy Speaker: Order. The hon. Gentleman should bring his remarks to a close. His contribution is very lengthy for an intervention.

Kali Mountford: I assume that my hon. Friend was rightly reminding the House that the Opposition lost the election because of the very measures to which I have been referring.
	As I said, the hon. Member for Sutton Coldfield is simply suffering from false memory syndrome. He has forgotten what it was like in those dark old days. He said a great deal about the right hon. and learned Member for Rushcliffe (Mr. Clarke), but what did he do? Immediately before the election, when everybody thought that interest rates should have gone up, what did the former Chancellor do? He sat on his hands. Why did he do so? He was worried about the election, but even that decision did not buy the election result for which the Conservatives hoped.
	That is why the current Chancellor rightly dealt with the Bank of England and said that we must be independent and that interest rates should not be tied to the electoral benefits or disbenefits of the Government of the day. It was perfectly correct to do that and it is right that that freedom exists for the Bank of England, but the Conservative party never had the guts to introduce it, as they had to have control to fool the electorate repeatedly and bribe them by saying We should not take this measure now, but we need to deal now with taxes, interest rates and the retail price index. At each general election, they had to buy off the public. In the end, the public saw through that approach and showed that they cannot be bought off with short-termism. That is what we are hearing todayshort-termism and a failure to look to the long term. People are looking only at what affects us today.
	Let us consider the long term and Britain's overall performance. It is uncharacteristically unfair of the Opposition to say that Britain is in doom and gloom and is about to be in a slough of despond. Nothing could be further from the truth. Let us consider some fair comparisons. On every economic indicator, Britain performs well against all its major competitors. It is easy for the Opposition to denigrate the Japanese performance, but let us remember Japan's position in the past. It was the envy of the world and it had the economy to which we all aspired, but now that economy has slumped. Have no lessons been learned from that?

Howard Flight: rose

Kali Mountford: I see that the hon. Gentleman is twitching in his seat.

Howard Flight: I thank the hon. Lady for giving way. Does she have any worries at all about the crowding out of the private sector, which produces the money and wealth to pay for the public sector, after we have seen a halving of the stock market in the past three years?

Kali Mountford: The hon. Gentleman raises a very interesting point. Indeed, it is a point that I raised when the Labour party was in opposition. At a party conference, I expressed concern about the same issue with regard to the then leader of the Conservative party, Margaret Thatcher. At that time, we saw absolutely desperate measures being taken, and she told us that we were going to be the shopkeepers of the world and that that was how we would support our economy. I could not understand how an economy based on only one strand of activity could possibly be successful and believed that it would be wrong to let all the manufacturing base simply dwindle away.
	Two parts of the manufacturing base are under particular stresstextiles and steel. It is false to say that the whole of manufacturing is declining at the same rate or that it is declining only in the UK. We must consider the whole world economy and the changing economic base. We must look at the new industries, which are not only service industries. In the 1980s and 1990s, I was terribly worried about the growth rate of hotels and the disappearance of the steel and coal industries. Perhaps Opposition Members should be giving us some lessons about what they did wrong at that time, but in similar circumstances, we must ask what is different today.
	Let us consider new measures and issues such as the amount of equity release, which was mentioned by the hon. Member for Sutton Coldfield and was also part of the total collapse of the economy under the Tories, when house prices were fired above inflation so that people could not afford to keep up. What is different now is the stability that we have in the economy. We do not have the soaring interest rates of 15 or 20 per cent., the rocketing inflation rates or the massive unemployment that we used to have. We have greater confidence in people's own abilities to sustain themselves, and that matters a great deal. If we keep talking down people's confidence and the confidence in the markets, and if we keep talking down Britain, that will become a self-fulfilling prophesy. It is madness, if we look around the world today and see how Britain is faring, even against the strongest economies such as the United States and Germany

Liam Fox: Germany!

Kali Mountford: The hon. Gentleman is disparaging Germany, but I seem to recall that it is one of the G7 countries, and one of the four biggest economies in the world. It is another economy that we once aspired to be like, along with that of Japan.

Michael Howard: Is the hon. Lady seriously suggesting that we want to aspire to be like the German economy? In its latest unemployment figures, 400,000 more people were put out of work, and nearly 5 million people are out of work altogether. Its growth forecasts have recently been reduced so that they show barely any growth at all. Is the hon. Lady seriously suggesting that we should aspire to be like the German economy?

Kali Mountford: I realise that the shadow Chancellor never really wants to hear anything that I say, and that he has probably been half asleep while I have been speaking. I was saying that we used to aspire to be like countries such as Germany and Japan, but we now fare far better than them. They had the strongest economies in the world, but they are now a long way behind the United Kingdom. [Interruption.] The right hon. and learned Gentleman obviously does not want to hear this, but the UK economy is stronger than the German economy. During his time in government, however, it certainly was not. That is my point.

Howard Flight: Will the hon. Lady give way?

Kali Mountford: How can I resist?

Howard Flight: I thank the hon. Lady for giving way. May I ask her for her views on why the German economy has gone off the rails so much? Will she not concede that part of the problem is that the private sector has withered because the burdens that have been put on it have been too great for it to sustain growth under them?

Kali Mountford: The hon. Gentleman is forgetting the great number of people who went to Germany after the Berlin wall was pulled down, which was an effort for peace that we all wanted but which had a great economic impact on the German economy. There were outflows from that. Every country has to go through the economic cycle and, to be fair to the German economy, it is at the downward end of its economic cycle now. That is one of the problems for convergence, because the cycles simply do not match up at the moment.

Roger Casale: Does my hon. Friend share my surprise that this Opposition day debate has been called one week after interest rates were cut to their lowest level in 50 years, and on the very day on which unemployment figures have fallen by 36,000 to a new historic low? That is the day on which the Opposition have chosen to discuss the Government's failure in economic management.

Kali Mountford: The key fact that my hon. Friend mentioned is the job figures. A Conservative Member tried to imply earlier that the new jobs in the economy were somehow detracting from the manufacturing sector, and that they were poor, part-time jobs that nobody really wanted. But we have to consider those jobs against the background of average earnings. Earnings have risen year on year over the last few years. In the public sector, earnings have risen by 5.7 per cent. in the last year. I do not call that peanuts. In the economy as a whole, earnings have risen by 4.9 per cent. If those jobs were rubbish, we would not be seeing that level of increase in overall earnings.

John Bercow: Will the hon. Lady give way?

Kali Mountford: If I must.

John Bercow: I am very grateful. Given that the hon. Lady referred earlier to housing, what assessment has she made of the effect of the change, during the last Parliament, in the rules on the use of capital receipts from the sale of council houses on the size of interest repayments on local authority debt?

Kali Mountford: The hon. Gentleman is digging a hole for himself. I was a member of a council at a time when capital receipts were not allowed to be spent on housing in any way, shape or form.

John Bercow: Debt?

Kali Mountford: If the hon. Gentleman will let me finish, I will tell him that the whole point of housing receipts was that they ought to have been ploughed back into housing. This Government have insisted that, at the very least, that money should be released for investment in social housing and, most importantly, in improving the quality of that housing.

David Laws: Will the hon. Lady give way?

Kali Mountford: I have not quite finished my point, but since the hon. Gentleman and I have been old friends on the Select Committee, I cannot resist him this time.

David Laws: I am most grateful to the hon. Lady. I agree that it is important that the receipts from the sales of social housing should be able to be reinvested. Is she not, however, somewhat concerned and embarrassed that, since her Government came to power in 1997, the number of social housing starts and completions has halved from the level at which it stood in 199697?

Kali Mountford: I point the hon. Gentleman to the Local Government Bill that is going through Parliament now, and to the housing strategy that has been announced by my right hon. Friend the Deputy Prime Minister. I would be embarrassed if that money had not been invested in improvements to the housing stock, over whose deterioration Conservative Members presided. If we do not invest in housingin terms not only of numbers but of qualitythere will be no social housing available and nobody would want to live in it anyway.
	It is an important aspect of the economy that we get the housing strategy right. While there is scope for more house building, we must also look at properties that are hard to let because they are in undesirable areas or simply empty because people have moved out to new areas. That relates to some of the differences in the growth of the economy between one area and another, which we need to look at. We need to ensure that prosperity is spread equally and fairly across the whole economy, through all sectors and regions and to all people.
	I cannot imagine that the hon. Member for Yeovil (Mr. Laws) would agree with the Conservatives' strategy for improvement. I am sorry to embarrass the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) again, but that strategy includes a 20 per cent. cut across the board. That simply does not cut it with me. At one point, I even heard a Conservative Member argue that that 20 per cent. cut would be implemented only on Government services. Well, we have been there before, and I have been there before in this speech. Would a cut in public services that related only to bureaucratsthese supposedly sinister creatures of the nightimply that their jobs were not worth while? Are the Conservatives seriously saying that civil servants do not do a good job? As an ex-civil servant, I do not think that that is the case.
	I simply do not believe that the proposed 20 per cent. cut would be aimed only at those bureaucrats. It would have to be aimed at the people who keep the whole system running. It would have to be aimed at the local education authorities. [Hon. Members: Why?] I am simply considering bureaucrats here, so as to be helpful. Let us consider the managers of our primary care trusts. Now, there is a reform and a half that the right hon. and learned Gentleman never even dreamt of. If we are looking at reform, and at spending money wisely, we could do no worse than to point to that. With a 20 per cent. cut, the primary care trusts would not have the money to spend on their managersthe people who keep their drug budgets down and who invest wisely in their patients' future.

Paul Farrelly: My hon. Friend has obviously read her John Maynard Keynes. Does she agree that under the Chancellor's handling of the economy we have been prudent in squirreling away capital receipts for a rainy daythe proceeds of the mobile phone auctions, for examplewhereas the Conservatives not only squandered those receipts, but counted them, using dubious accounting, as negative expenditure?

Kali Mountford: My hon. Friend is right. When we have sunshine we squirrel money away, and when we have a rainy day it is there to spend. We are now seeing expenditure in the form of largesse of which Conservative Members would never have dreamed. Moreover, going by what we have heard today, they would not have approved of it and certainly do not aspire to it. Conservative Members do not want to invest in public sector services. Clearly, they do not believe in Keynesian economics, but even if they did I expect that they would get it wrong.
	I congratulate the Chancellor on getting this country through some stormy waters in difficult times. That is something of which to be proud, not to denigrate, as Conservative Members continually do.

David Cameron: I draw the House's attention to my entry in the Register of Members' Interests.
	I am pleased to take part in the debate and to follow the hon. Member for Colne Valley (Kali Mountford). She spoke with great passion and at some length, but I enjoyed listening to her. It has been a controversial and heated debate; I fear that my contribution may be slightly less so. I intend to be constructive by trying to solve a genuine mysterywhere has all the money gone? In our experiences in our constituencies, we have all seen a large amount of Government money being spent, yet, although there have been some improvements, performance in many public services has remained flat or, in some cases, has gone down. My right hon. and learned Friend the shadow Chancellor gave the most telling figure of the debatein the past two years, there has been a 22 per cent. increase in health spending, but a mere 1.6 per cent. increase in activity.

Andy Burnham: On that figure concerning NHS productivity, does the hon. Gentleman accept that the biggest problem that the NHS faced in 1997 was a lack of capacity in buildings and in human resources, and that making those investments does not necessarily lead to an increase in patient outcomes? Will he address that specific point? Conservative Members have mentioned it at least four or five times, but it is facile rubbish.

David Cameron: I shall come to that. A particular problem in the health service, especially in the south of England, concerns the number of nurses. That is the key factor, and it has to be got right.
	Here are my three reasons why I believe that money is being wasted. First, we have heard the Chancellor say many times that resources must be backed by reform. Conservative Members would all say that we agree with that, but the question is, what reform? There have been loads of changes in the health servicethe primary care trusts, which are now being repackaged and reformulated, the Commission for Health Improvement, and a billion quangosbut have they been the right ones? Take the NHS in Oxfordshire, where the problem centres on nurse shortages. In the John Radcliffe hospital, which serves my constituency, there is a shortage of 400 nurses and a 14 per cent. vacancy rate. The effect of that is cancelled operations. Many constituents come to my surgery having had their operations cancelled six or seven times. There are queues in the accident and emergency department, and our trust is one of the places where patients are being kept in ambulances outside the hospital. We also have bed blocking. Older people who should go into homes in the community cannot because their care packages cannot be put together. What is the problem? A shortage of nurses. Why is there a shortage of nurses? Because in the south-east the cost of living is much higher and we cannot retain them.

Phil Hope: If the hon. Gentleman's criticism is that there are insufficient nurses in Oxfordshire, can he explain how a 20 per cent. cut in spending on the health service will resolve that problem?

David Cameron: As I sat down I thought that it might be a mistake to give way to the hon. Gentlemannow I am certain. If he has been listening to the debate and it has stayed in the gap between his ears for long enough, he should know that we are not committed to a 20 per cent. cut across the boardwe are looking for savings.
	If the extra money cannot go into extra pay for nurses in areas that need to retain nurses, the money simply will not work. I speak from experience, because my son has been ill and I have spent two of the past 10 months in various hospitals in Oxfordshire and London. The John Radcliffe hospital in Oxford has a superb staff who do a fantastic job. Money is being invested in it. The accident and emergency department has been closed, the temporary department is much better and the new one will be even better. However, delays persist because the hospital does not have enough nurses. The number of entry points to accident and emergency does not matter; if the nurses are not there to process the patients, the problem cannot be solved.
	I shall give the hon. Member for Corby (Phil Hope) another example, from a conversation with a male nurse in Great Ormond Street hospital. I was on my way to Health questions and I asked him what he would like me to ask the Secretary of State if I was called. He wanted me to ask about the appalling waste of money on agency nurses. He said, They cost this hospital hundreds of thousands of pounds. They're far more expensive than normal nurses. It's an absolute scandal and not nearly enough has been said about it. I asked how he knew so much about the subject. He replied, I am an agency nurse. I'm doing quite well out of it, but the amount of money being spent is scandalous.
	I shall relate one more story from my experience. I had to go to the accident and emergency department at St. Mary's, Paddingtona hospital in the centre of Londonwith my son at about 11 pm. I waited seven hours. We were not in the children's accident and emergency department because a shortage of nurses means that it does not open at night. After sitting there for seven hours, we were offered a bed. None was free in the whole of central London; the nearest was in Guildford.
	Shortage of nurses is the problem in south-east London. The extra money will not work unless we have different rates of pay in different parts of the country. [Hon. Members: More money.] It means more money in some parts of the country. However, the key element is more freedom. We must give all hospitals, not simply 12 foundation hospitals, the freedom to respond to their needs.
	In the remaining four minutes, I want to draw hon. Members' attention to another example of wasted money and no improvements. It is a microcosm of the debate. In some places, more spending does not lead to a better or even a level outcome. It can lead to a worse outcome. The NHS has experienced problems with care homes, and the new regulations have led to the closure of several. To give the Government their due, they have listened and intend to make some changes, which may have an impact.
	No one, however, has paid attention to the effect of regulation on adult placements in the community. In Oxfordshire, 100 adult placement carers take vulnerable adults into their homes. They are like foster parents. They are heroes and heroines, who do a fantastic job. They are paid a modest amount of money and they keep vulnerable adults, who often have mental health problems, physical handicaps or have been in care, out of the care system. They do a great job.
	Until now, county council social services departments regulated the carers. The departments interviewed them for 40 hours and inspected them every year. That system worked well. In Oxford, 100 adult placement carers look after approximately 250 people. The Government, armed with all the new money, set up the National Care Standards Commission and introduced the Care Standards Act 2000. As well as care homes, the commission has to regulate adult placement carers.
	First, the carers must read a document that is approximately an inch thick and pay for the privilege of registering. They subsequently have to read a 75-page document entitled, Care homes for younger adults in adult placements. I remind hon. Members that we are considering people who look after vulnerable adults in a loving family atmosphere in their homes, not care homes. The carers must also read the regulations, which comprise 27 pages. They have to plough though 142 pages simply to be regulated.
	It is unsurprising that several of the 100 carers who take in vulnerable adults are giving up the ghost. A letter from Oxfordshire county council states:
	At the time I last wrote to you on this subject, an adult placement carer had resigned from the scheme and many more were expressing unhappiness about the changes arising from the introduction of the Care Standards Act 2000. I am afraid that the tally has risen further and 13 carers have now either withdrawn from the scheme altogether, or have reduced the categories of care they are willing to provide in order to avoid the implications of registration and inspection by the National Care Standards Commission.

Paul Farrelly: rose

John MacDougall: rose

David Cameron: I shall give way to the hon. Gentleman who used to work for The Observer.

Paul Farrelly: Before we explore every nook and cranny of Witney, let me take the hon. Gentleman back to his initial question. He asked where all the money had gone. Given the public debt that we inherited in 1997 and the state of the public infrastructure, will he explain what happened to the windfall from privatisation and North sea oil under previous Conservative Administrations?

David Cameron: The hon. Gentleman would probably have done better to stay at The Observer.
	An easy answer is available to the Government. They need only tell those running adult placement schemes, You do not have to be regulated by the National Care Standards Commission; the arrangement works perfectly well when managed by social services departments. If the Government do not do that, they will find that in this and other areas all their extra spending will be devoted to extra bureaucracy, extra publications, extra documents, extra inspectionsand no extra services. Indeed, in some instances, such as the one I have given, services will actually get worse. 3.40 pm

Liam Fox: It is clear from the debate that some things are beyond dispute. That the Government have taxed more and that the Government have spent more cannot be disputed by anyone with any objective sense. The question is this: why have the Government failed to deliver? Today the Opposition have first tried to reveal areas in which the Government have failed to deliver, and then suggested reasons for that failure.
	The debate began with a forensic dissection by my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), the shadow Chancellor, of the Government's failures to handle the economy. He mentioned the unpredicted deterioration in the public finances, the disastrous state of our manufacturing sector, the fear that grips the business community in regard to our economic prospects, and the long-term suffering that older people will endure as a result of the Chancellor's pension theft. Robert Maxwell's pension theft was a national scandal; the Chancellor has made it a part of central Government policy.
	My right hon. Friend the Member for Wokingham (Mr. Redwood) told us that more regulation, higher taxes, more bureaucrats and greater waste led to a weaker economy and poorer public services. He depicted the Chancellor as the destroyer of pensions. He spoke of the Chancellor's failure to build on the success of the Conservatives' telecommunications revolution, and dismissed the disastrous sale of gold that has cost the British taxpayer more than 750 million. It did my heart good to listen to my right hon. Friend. Far too many Conservatives readily accept criticism of failures in office; too few are willing to accept responsibility for our many achievements.
	My hon. Friend the Member for Sutton Coldfield (Mr. Mitchell) rightly spoke of the golden inheritance received by new Labour. Never had a Government come to office, he said, at a time of more favourable economic trends. As he also said, despite thatand despite two overwhelmingly good parliamentary majoritiesthe Government have achieved very little during their time in office.
	As my hon. Friend the Member for Witney (Mr. Cameron) pointed out, the shortage of nurses, the huge vacancy rates, the cancelled operations and the level of bed blocking are indicative of a mismatch between supply and demand in relation to NHS staff, especially nursing staff. That in itself points to the need for substantial reform. As my hon. Friend said, flexible pay arrangements are needed, but there are other ways of attracting nursing staff. We need to think about shift flexibility, the physical security of staffall staff, that is, not just nursestraining and supervision, and professional freedom and self-respect. In the case of the nursing profession, that means not using surgically trained or gynaecology nurses in general medical wards, but affording them the respect that they are entitled to expect given their expertise.
	One of the most enlightening speeches was made by the hon. Member for Truro and St. Austell (Matthew Taylor). As usual, he had his finger on the pulse of public sector failure. He said, We found out today that thousands of old people are waiting for discharge in our hospitals. He must be one of the last people in Britain to discover that; only Liberal Democrats could be surprised by it.
	What really galled me about the hon. Gentleman's performance, however, was this. It is clear that the Liberal Democrats will tell one group that taxes are too high, and will tell others that they should be raised. They will tell one group that spending needs to increase, and as the Chancellor said, they will write to another group saying that it does not need to increase at all. They tell one group that they are the party of the inner city; they tell another that they are the party of the country. They are pro-war; they are anti-war. They are for free nursing care, but they will raise the cost of nursing care when they are in charge of local government. The fact that the once great Liberal party has descended into the second-rate charlatan collective that the Liberal Democrats are today is indeed a national tragedy.
	My hon. Friends have drawn attention to Labour's failures on a number of frontseducation, for instance. The hon. Member for Colne Valley (Kali Mountford) talked a great deal about literacy and numeracy, but according to the 2002 survey one child in four now leaves school unable to read, write or count properly. These pupils are leaving primary school after six years of her Government's being in office, so talk of incremental change is complete nonsense. In GCSEs, the gap between children in inner cities and elsewhere is actually growing, according to a departmental survey of December 2002. Only 39 per cent. of children are getting grade C or above in maths, English and science.
	On law and order, the Prime Minister said that
	crime figures are the measure of whether this Government is succeeding or failing.
	In the year to September 2002, overall crime was up by 2 per cent. Robberies were up by 13 per cent., domestic burglaries by 5 per cent., retail crime by 6 per cent., and drug offences by 12 per cent. In the past year, crimes involving the use of firearms were up by 35 per cent., and those involving the use of handguns by 46 per cent. The number of robberies involving the use of firearms increased by one third in the past year, and such robberies are at their highest level for more than a decade. Crimes involving the use of firearms are up by 80 per cent. since Labour came to power in 1997. How can there be any doubt about their failure to deliver on public services?
	Transport is a complete shambles. So far, the Government's answer to making the trains run on time is to cut the number of trains running. Well, that is an act of genius. The London underground is a complete debacle. The Government do not know whether to build more roads or to have fewer of them, and they cannot seem to make up their mind whether to build more airports, or to have fewer of them. Today, they have tried very hard to distance themselves from the soon-to-be-hated congestion charge, which is a direct result of their Transport Act 2000.
	We need to look not only at the failure to reform, but at the reason behind it, which is to be found in the contradictions within the Government themselves. As I have pointed out, the Prime Minister said:
	Choice mechanisms enhance equity by exerting pressure on low quality or incompetent providers. Competitive pressures and incentives drive up quality, efficiency and responsiveness in the public sector.
	How far can that possibly be from the Chancellor's view, as expressed in his speech to the Social Market Foundation? In it, he said:
	In health not only is the consumer not sovereign but a free market in health care will not produce the most efficient price for its services or a fair deal for its consumer.
	These views are not compatible, but at least the clear difference that has emerged in the war of No. 10 successionin the axis of acrimonyis far better than the confused position of the Secretary of State for Health. He began by saying that he would
	come down like a ton of bricks on anyone who has anything to do with the private sector.
	Now, not only does he use the private finance initiative at every opportunity; he also wants to establish foundation hospitals, with the freedom to borrow and to set pay and conditions. As a concordat with the private sector, he is using private hospitals for NHS patients, and he wants to put private management into failing NHS hospitals. That is rather striking when one compares it with what he said in this House on 26 June 2001:
	by and large, we thankfully have one monopoly provider and that is the NHS. As long as a Labour Government are in power, that will remain the position.[Official Report, 26 June 2001; Vol. 370, c. 500.]
	Little wonder that we cannot get proper reform, and that there is no impetus for real change in the public sector, when there is such a division of ideology and philosophy on the Government Front Bench. The Cabinet fight like ferrets in a sack. They cannot sit on the same platform, and now it is more a question of who is likely to succeed the Prime Minister, rather than what is best for the country. We are all victims of the proxy war in the battle for No. 10.
	We have heard several times today about the statistics that are most damning in respect of the national health service. Despite a 21.5 per cent. increase in real-terms funding in the past two years, the level of finished consultant episodes has increased by only 1.5 per cent., and the number of patients admitted to our hospitals actually went down last year by 0.5 per cent. It takes quite a lot of doing to spend that amount of money and get fewer patients into hospitals.
	No one doubts the need for greater capacity or the Government's genuine commitment to achieving it. However, before any Government spend the tax that they are taking away from hard-working people, they have a duty to ensure that it is wisely spent. The NHS remains too centralised, too politicised, and too bureaucratised, and there is too much waste. The NHS is a victim of the target culture, and there is too little choice. There is an incipient crisis in general practice, for which vacancies have risen by 70 per cent. in the past year. Indeed, the number of applicants for each place has fallen by 50 per cent. in that time.
	The Chancellor has had a good political run, but his own share price is falling. No. 10 and No. 11 may be very close to each other geographically, but the distance politically can be very great indeed. The Government need to remember that they have no money but taxpayers' money. Anyone can spend more moneyspending it well is much more difficult. The Labour Government believe that the state can make better choices than individual citizens. We believe that citizens make better choices than the state. Labour believes that the state is the best manager for public services. We believe that the state is an inappropriate and poor manager for public services.
	The Labour Government believe that Whitehall knows best; they believe in standardisation, centralisation, taxation, taxation, taxation and taxation. We believe in personal choice. We believe in diversity. We believe in innovation. We believe in excellence. We believe in trusting individual citizens. Enough is enough.
	3.50 pm

Paul Boateng: This has been a good debate, with excellent speeches from my hon. Friends the Members for Corby (Phil Hope), for Gedling (Vernon Coaker) and for Colne Valley (Kali Mountford). My hon. Friends the Member for Preston (Mr. Hendrick) and for Central Fife (Mr. MacDougall) were desperate to contribute, but there was not enough time.
	How different my hon. Friends were from Opposition Members! They called the debate to talk about the economy and public services, but they failed to call in their Back Benchers. At 2.36 pm, during the speech of the right hon. Member for Wokingham (Mr. Redwood), I, too, did some counting. We all remember his speech and the 10 catastrophic failures. I counted seven: three behind him and four directly in front of him on the Opposition Front Bench. The reality is that Conservative Members failed to come to the House this afternoon because they are either indifferent or ashamed. They are ashamed of their party's record when it was in government: 3 million unemployed, interest rates at 10 per cent. and inflation at almost 10 per cent.
	We do not need to look only at the Conservatives' record in government; let us consider their record when they wereas they are now and as they will remainin opposition. They opposed the independence of the Bank of England; they opposed the new deal; and they opposed the minimum wage, yet they have the nerve to take us to task on our economic competence and the stewardship of my right hon. Friend the Chancellor.
	The Conservatives want to talk about public services. Let us talk about public services. What is their position? What is their record on the NHS? They opposed the NHS at its inception and they oppose its principles todaythe very principles that we are pledged to stand up for. Those principles are stability, enterprise and fairness and they characterise the Labour Government's stewardship of the economy and of our public services[Hon. Members: Enterprise?] Yes, enterprise. We are supporting enterprise at a time when the world economy is uncertain. We supported enterprise when world trade growth fell by 12 percentage points in 2001 and when 20 of the world's largest economies were either in recession or just coming out of recession. We are doing so at a time when there are real risks and uncertainty, yet at this time and in this country we have GDP growth. At this time and in this country, we have the macro-economic stability that truly gives businesses what they want: the certainty that they have a Government who are on their side.

John Redwood: Will the right hon. Gentleman give way?

Paul Boateng: No. The hon. Member for Woodspring (Dr. Fox) did not give way during his summing up, so I shall not do so during mine.
	Macro-economic stability is not enough on its own; we have to do more. This Government are doing more to bridge the productivity gap. It is this Government who are targeting reforms at improving the productivity of British business. It was this Government who introduced independent competition authorities. It was this Government who ensured that we had a simplified VAT system. It was this Government who introduced the research and development tax credit. It was this Government who extended to all companies better education and improved work force training. We are entitled to be proud of that.
	In November, in the pre-Budget report, we introduced policies that will combine enterprise with fairness. Yes, we believe in enterprise; we are the party of enterprise. In deprived areas, classrooms or boardrooms, the message is the same: Yes, we can do better, but the Government are there to help and the Government are on your side.
	Let us recall the Conservative record on public services. Under the Conservatives, crime doubled; the hospital building programme ground to a halt; eyesight testing charges were introduced; and education funding was cut by 80 per pupil in real terms in their last three Budgetsand they presided over a massive backlog in transport investment.
	Conservative Members ask what has happened to the money and what has been going on in the NHS. There has been a 4.9 per cent. increase in elective admissions; a 3.2 per cent increase in outpatient consultation; an 11 per cent increase in patients admitted to hospital since 199798; waiting times are coming down; more people are benefiting from new drugs; and more patients are being treated closer to home. That is what we are doing for the NHS. If Conservative Members had their way, all that would come to an end.
	Of the extra 5 billion in 200102, 40 per cent. was used to pay for additional staff, drugs, supplies, increased activity and the quality of activity; and 14 per cent. was invested in building capacity for the future, which the Conservatives never did. They simply tore down the present. We are delivering; they failed to deliver. In all the contributions by Conservative Members this afternoon, we heard not one constructive suggestion on how they would do better.
	Equally important, we have not heard one suggestion either about how a Conservative Government would pay, which is why the hon. Member for Woodspring wound up. The Opposition did not dare let the hon. Member for Arundel and South Downs (Mr. Flight) speak. He had to fight his way to the Dispatch Box by way of an intervention. They would not let him speak because of what he had told not only selected groups of journalists but the readers of any newspaper whose journalists were prepared to interview him.

Michael Howard: Will the hon. Gentleman give way?

Paul Boateng: I will not give way but I challenge the shadow Chancellor to disown his phantom Chief Secretary[Interruption.]

Mr. Deputy Speaker: Order. We must hear the conclusion of this debate in reasonable silence.

Paul Boateng: Will the shadow Chancellor disown the comments of the phantom Chief Secretary? Will he publish the memorandum? If not and he will not let us see the figures, we cannot believe a word he says.

Michael Howard: Has it occurred to the Chief Secretary that this debate is about the Government's failure over the economy and public services? Does he not realise that whereas my hon. Friend the shadow Health Secretary and I are happy to share this debate, the hon. Gentleman cannot get the Secretary of State for Health and the Chancellor of the Exchequer in the same roomexcept when they meet to squabble in Cabinet?

Paul Boateng: Will the right hon. and learned Gentleman answer the question? Will he respond to the challenge? This is what the phantom Chief Secretary said: Oh yes, we are certainly looking at savings. The Leader of the Opposition said, We are looking at savings. That is exactly what was said by the hon. Member for Arundel and South Downs.

David Maclean: rose in his place and claimed to move, That the Question be now put.
	Question, That the Question be now put, put and agreed to

Question put accordingly, That the original words stand part of the Question:
	The House divided: Ayes 141, Noes 363.

Question accordingly negatived.
	Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):
	The House divided: Ayes 310, Noes 186.

Question accordingly agreed to.
	Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
	Resolved,
	That this House notes that as a result of this Government's economic management, even in times of global economic uncertainty when the world economy is experiencing the first simultaneous downturn for nearly thirty years and twenty of the world's biggest economies including the United States, Japan, Asia, much of Latin America and Europe have been or are in recession, the UK economy continues to grow with low levels of inflation and low interest rates; welcomes the 1.5 million extra jobs created since 1997 and resists any attempts to abolish the New Deal and the tax credits that make work pay; further welcomes the cuts in the rates of corporation tax, capital gains tax and small business corporation tax since 1997 and the introduction of the RD tax credit; and believes that after years of neglect between 1979 and 1997 it is even more important to invest in public services and to support the Government's record extra investment in Britain's health, education and other public services combined with reform to build high quality public services for all and its resistance to any attempt at this time of global uncertainty to cut public spending.

Oliver Letwin: On a point of order, Mr. Deputy Speaker. Not three hours ago I raised a point of order with Mr. Speaker, in which I pointed out that the chairman of the Labour party had made very strong statements about the problems that gave rise to the action at Heathrow. Not very long after I raised that point of order, the chairman of the Labour party appeared on the radio again, not in this House, and made statements that appear to contradict his earlier statement. That is a very serious matter.
	We are dealing with life and death. It seems appropriate that there should be clarity. Conservative Members support the actions that the Government are taking. We want to have the opportunity to ensure that, in a sober-minded fashion, the nation can hear a clear account. Have you, Mr. Deputy Speaker, received from Ministers any request to make a statement about this matter?

Andrew MacKay: Further to that point of order, Mr. Deputy Speaker. As you will be aware, my constituency lies directly to the west of Heathrow, under the flight path, and a large number of my constituents work either at Heathrow or for various airlines. There is immense confusion after the contradictory statements from the chairman of the Labour party. Whereas my constituents and I do not expect detailed information that might be security sensitive, I would ask you whether you have yet received any request for any clarification to be made at this very difficult time, which is what my constituents would want?

Patrick Cormack: Further to that point of order, Mr. Deputy Speaker. Mr. Speaker has on many occasions deprecated Ministers' making outside the House statements that should have been made in it. It is a folly that is compounded when contradictory statements are made. Would you be kind enough to have a word with Mr. Speaker? I realise that he cannot summon a Minister to make a statement, but could the concern that is felt both in the House and in the country, with people feeling exceptionally confused and worried, be reflected in a message to Ministers, so that before the House rises tonight we have a statement of clarification?

Several hon. Members: rose

Mr. Deputy Speaker: Order. I understand that other hon. Members will have local concerns, and the whole House obviously has deep concern over what is acknowledged on all sides to be a grave matter, but, as has already been recognised in one of the points of order, the Chair cannot dictate when a Minister of the Crown should come to the House.
	I am aware that the Government gave a commitment some while ago that they would keep the House informed. I am sure that they will have heard what right hon. and hon. Members have said, and I imagine that this matter could further be pursued through the usual channels.
	The straight answer is that the Chair has not received any indication as of now that there is to be any further ministerial statement in the course of this sitting day.

Eric Forth: Further to that point of order, Mr. Deputy Speaker. Just for clarification and to help the House, which I know you want to do, when you say that the Chair has no power, is it not the case that, procedurally, if the Speaker granted an urgent question on the matter, the Minister would be obliged to give an account of events to the House? That and perhaps other procedures are available to the House and the Speaker for us to ensure that we hear about vital matters from Ministers rather than hearing contradictory accounts on the radio or, indeed, anywhere else.

Mr. Deputy Speaker: The right hon. Gentleman is correct that that procedure exists, but it cannot apply at this point in the sitting day. There is a time when submissions can be made to Mr. Speaker, which he considers totally impartially and on which he reaches a decision. It is open to any right hon. or hon. Member to make such a request to be considered at the next opportune time.

David Wilshire: Further to that point of order, Mr. Deputy Speaker. You probably recall that the IRA terrorist attack on Heathrow was mounted from my constituency and that the aircraft involved in the last crash at Heathrow came down in my constituency, so you can guess how my constituents feel at the moment. I have been trying all day to get information that I can convey to my constituents to reassure them about what is going on so that they know that their interests are being looked after. Is there any way at all that my constituents, who are rightly worried by what is happening, can get some information from someone? If we cannot get a Minister to the House, can you suggest how else we can get some facts?

Mr. Deputy Speaker: The hon. Gentleman's concern is perfectly understandable bearing in mind the geographical placing of his constituency, but I cannot add to my ruling. I am sure that the concerns that are felt will be reflected in the Government's thinking and no doubt in the mind of Mr. Speaker if he is called on to adjudicate on another request for an urgent question.

Julian Lewis: Further to that point of order, Mr. Deputy Speaker. Do you think that Mr. Speaker would be more minded to grant an urgent question tomorrow bearing in mind the fact that the co-operation of hon. Members on both sides of the House is essential on matters of security and intelligence, so the Government's behaviour should be of a higher standard than is usually the case in the party political situation?

Mr. Deputy Speaker: I cannot possibly anticipate how Mr. Speaker will react to any such matter that is put to him. I do know, however, that he will give it sober and impartial consideration. We must now move on.

HUNTING BILL (PROGRAMME) (NO. 2)

Motion made, and Question put forthwith, pursuant to Orders [28 June 2001 and 29 October 2002],
	That, in accordance with the Resolution of the Standing Committee of 11th February 2003, the programme order of 16th December 2002 in relation to the Hunting Bill be amended as follows
	In paragraph 2 of the order, for '13th February' substitute '27th February'.[Mr. Derek Twigg.]
	Question agreed to.

Orders of the Day
	  
	Income Tax (Earnings and Pensions) Bill

As amended in the Joint Committee, considered.
	Motion made, and Question proposed,
	That the Committee of the whole House be discharged from considering the Bill.[Dawn Primarolo.]
	Question agreed to.
	Order for Third Reading read.
	[Relevant document: The First Report from the Joint Committee on Tax Law Rewrite Bills, Session 200203, on the Income Tax (Earnings and Pensions) Bill, HC 287I.]

Dawn Primarolo: I beg to move, That the Bill be now read the Third time.
	I am pleased to open the Third Reading debate on a Bill that rewrites income tax rules on employment income, pensions and taxable social security benefits. It has been produced by the tax law rewrite project, which is a long-term undertaking to modernise direct tax legislation so that it is clearer and easier to use. Before dealing with the specifics of the Bill itself, it may be helpful if I explain a little about the work of the project.
	The project was set up in 1996 to rewrite most of the direct tax law, currently running at more than 7,000 pages of legislation enacted over the past 200 years. The key aim of the project is to produce rewritten legislation that is acceptable by all the main users as clearer and easier to apply. While making measures more accessible, the project takes a great deal of care to preserve the effect of the present legislation apart from minor agreed changes.

Patrick McLoughlin: I wonder whether the right hon. Lady can help me. She said that the project reflects the 1996 announcement to rewrite tax rules over many years. How up to date is it? Has it taken into account all the new taxes that the Government have imposed on the British people?

Dawn Primarolo: The project was started in 1996 by the previous Administration and the right hon. and learned Member for Rushcliffe (Mr. Clarke), and is supported by the Government. The answer to the hon. Gentleman's question is yesboth the Capital Allowances Act 2001 considered by the House two years ago and the Bill cover all the legislation to date. If he cares to scrutinise the Committee proceedings, he will find some interesting debate on the more unusual measures that the previous Government introduced into our tax system. I am sure that he is waiting with bated breath to read that as his essential bedtime reading.

Andrew Tyrie: I am sure that there have been failings by Members on both sides of the House in the past. However, was the Inland Revenue asked to provide a full compliance cost assessment of each measure while, at the same time, looking at the way in which they could be rewritten? Will the right hon. Lady put that full compliance cost into the public domain? Having looked at the matter, has she concluded that the best way to simplify the burden of dealing with those forms is not merely to rewrite them but to simplify the tax system itself?

Dawn Primarolo: On this occasion, it is not for me to criticise the previous Government on its foresight in establishing the tax law rewrite. As the hon. Gentleman will know, it is precisely thata rewrite of the current tax legislation. The question of tax simplification, which the House has discussed many times, and will do so again in future because of its importance to the tax debate, is a separate issue. The hon. Gentleman asked about compliance cost assessment. As a measure in the new format, the Bill has to undergo an assessment on compliance costs. That information was available to the House on Second Reading and in Committee and is included in the explanatory notes. I am sure that the hon. Gentleman is pleased that there will be negligible compliance costs, if any. Because the increased compliance is so small it is impossible to measure. However, there is considerable evidence from everyone who was consulted that the new legislation is easier to understand and therefore less of a burden on taxpayers.

Several hon. Members: rose

Dawn Primarolo: I am happy to give way, but I hope that hon. Members will look at the tax law rewrite, rather than extend it into a wider debate.

Mr. Deputy Speaker: Order. The right hon. Lady has a number of hon. Members from whom to choose.

Dawn Primarolo: What an enviable position to be in! While not wishing to detain the House, perhaps we should work through them one by one. I shall give way to the hon. Member for Fareham (Mr. Hoban).

Mark Hoban: On the issue of compliance costs, given that the Bill is the second measure to come before the House from the Joint Committee on tax law rewrite Bills, what research has the Treasury done on the beneficial effects of the first measure, the Capital Allowances Act 2001?

Dawn Primarolo: I do not have the regulatory impact assessment of that Act with me, although it has already been discussed and passed by the House. However, I can make sure that a copy is sent to the hon. Gentleman. I draw his attention to the regulatory impact assessment accompanying the Bill, which is one of the papers available to the House today and will answer his questions. On capital allowances, he will know as well as I do of the enormous relief, amounting to many billions of pounds, that they provide for businesses.

Several hon. Members: rose

Dawn Primarolo: I shall give way to the hon. Member for Sutton Coldfield (Mr. Mitchell), as I am pleased to see him back in the House again.

Andrew Mitchell: I thank the Paymaster General for that kind endorsement from the Labour party, which I shall bring to the attention of my constituents at a subsequent election.
	I strongly support the rewrite Committee and the work that the Paymaster General and her colleagues are doing. Of course, as she said, the project was set up by the last Conservative Government. Clearly, the rewrite is enormously technical and involves a lot of practitioners in the City and elsewhere. How does she go about ensuring full consultation with all interested parties and with practitioners in particular? Will she tell us whom she consults, and on what basis and how she consults them?

Dawn Primarolo: In giving way to the hon. Gentleman, I said that I was pleased to see him back in the House on this occasion. I was not extending my remarks any further, much though I recognise that he may be an agreeable fellow.
	I shall deal in my speech with the points that the hon. Gentleman raised about who was consulted and the consultation process. The point that underlies his question is extremely important. We must have very wide consultation. If the process is to achieve its objectives of being easy, clear and helpful to practitioners, the practitioners themselves must agree that that is the case.

Several hon. Members: rose

Dawn Primarolo: I shall give way first to the right hon. Member for East Yorkshire (Mr. Knight), who is sitting at the back, but I shall work back down the Opposition Benches and I shall not forget the hon. Member for Buckingham (Mr. Bercow).

Greg Knight: I am most grateful to the Minister for giving way. Will she not keep us in suspense until later in her speech, but deal with a point that follows on from that which my hon. Friend the Member for Sutton Coldfield (Mr. Mitchell) raised? I notice from the Committee's minutes that, on 14 January, it ordered that
	The uncorrected transcript of the oral evidence together with the associated memorandum be published on the internet.
	When were those details placed on the internet and are they still there? If so, can the Minister tell the House the URLuniversal resource locatorfor the internet page? Has provision been made to encourage public feedback? Those of us who are interested in pursuing more online consultation want the public to be encouraged to give their feedback on such issues via the internet.

Dawn Primarolo: At this precise moment, I cannot give the right hon. Gentleman the exact reference for which he asks.

Stephen O'Brien: rose

Dawn Primarolo: I should like to answer one question at a time, even though the hon. Gentleman might be trying to help me.
	I shall ensure that I provide to the right hon. Member for East Yorkshire (Mr. Knight) the information that he requests before the end of the debate. He is absolutely right in his comments, as the hallmark of the consultation on the Bill was that we continued the process even after the final drafts had been published to ensure that all possible corrections and errors could be put before the Committee. When I have given him the reference that he requests and he looks at the proceedings of the Committee, he will see that the Government had to table amendments even at the Committee stage to correct some aspects of the draft Bill. We will continue to pick up those issues.
	The organisations that took part in the consultation are listed in volume 1 of the explanatory notes to the Bill: the Cardiff law school at Cardiff university, the Chartered Institute of Taxation, the City of London Law Society, the Confederation of British Industry, the construction industry joint taxation committee, Deloitte and Touche, Ernst and Young, Global Employment Solutions, the Holborn Law Society, ideasUK, the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland, the Institute of Directors, the Institute of Payroll and Pensions Management and John Jeffrey-Cook. Other representations came from KPMG, Mayer, Brown, Rowe and Maw, the share scheme lawyers group and the special committee of tax law consultative bodies. The list goes on; I shall not read all the names into the record, but they are there for the right hon. Gentleman to see.

Stephen O'Brien: rose

Several hon. Members: rose

Dawn Primarolo: I shall give way to the hon. Gentleman on the Front Bench first, as that is what I am required to do, but other hon. Gentlemen should not be too worried, as I shall give way to them as well.

Stephen O'Brien: I am most grateful to the Paymaster General for giving way. She has most helpfully read out a list of the many consultees that have been helpful and supportive in the project. In case it is of some help to her, I should like to point out that the URL that has just been requested is www.inlandrevenue.gov.uk/rewrite/index.htm.

Dawn Primarolo: I thank the hon. Gentleman for supplying that information to the House. That reinforces the point about cross-party support for the tax law rewrite project. The Special Committee procedure was chaired by the right hon. and learned Member for Rushcliffe (Mr. Clarke)who very skilfully saw us through our Committee stagesand Lord Howe of Aberavon, who has been energetic and committed to this project for some time. If anything had been awry or not correct, or if the Government had been attempting to do anything in the Bill that they should not have been doing, I am absolutely confident that those two right hon. and learned Gentlemen, whose skills are enormous, would have spotted it.

George Osborne: The right hon. Lady will be aware that the Inland Revenue's 200203 annual report on this project stated:
	The current volume of new legislation annually on direct tax means that the project is now operating in a very different environment from that in which it was conceived.
	I am not entirely clear what that means. Does it mean that there are many more taxes being introduced now than in 1996? The report also says:
	This has made it all the harder to find and maintain resources for our work.
	Will the Paymaster General confirm that those resources are being provided to the Inland Revenue?

Dawn Primarolo: I can confirm that the resources are being maintained and committed to the Inland Revenue tax law rewrite project. Indeed, if the hon. Gentleman reads our Second Reading debate in Hansard, he will see that the right hon. and learned Member for Rushcliffe complimented the Government on continuing their commitment to ensuring that the tax law rewrite project would work through the programme of legislation. He also took note that, when the tax law rewrite project was announced in 1996, the then Government gave it five years in which to complete the review. He accepted, as did Lord Howe of Aberavon, that that was somewhat optimistic, but good progress is none the less being made in what continues to be a complex area of taxation, particularly in the international dimensions.

John Bercow: I well recall the racy and intoxicating speech made by my right hon. and learned Friend the Member for Rushcliffe on a previous occasion in a debate not dissimilar to this one. I am grateful to the right hon. Lady for confirming that the Government's 53 new taxes are included in the rewrite project, but will she tell the Housein the light of the 2,000 new clauses and schedules proposed by the Government over the last five yearswhether a distillation and synthesis of the material is intended, such that there will be a reduction from the current 7,000 pages to something altogether more manageable?

Dawn Primarolo: It is part of the project to ensure that the legislation is easier to read, has shorter sentences, is easier to use, and has comprehensive signposts[Interruption.] The hon. Member for Hertford and Stortford (Mr. Prisk) is pleading for larger print. It is true, however, that a simpler explanation that is easier to use can sometimes be of greater length than the original. Above all, however, the tax law rewrite project enables us to remove legislation that is no longer needed but happens still to be on the statute book, so this is a win-win situation. The legislation is usable and, where possible, shorter, and redundant legislation is removed so as not to confuse the taxpayer.

Tim Loughton: I have been listening intently to the Paymaster General's intentions regarding the simplification of the tax position that underlies the Bill. Surely the best way to simplify the tax situation is to abolish some of the taxes. The former Chancellor, Lord Lawson, made it a hallmark of his tenure of the chancellorship that he abolished a tax in each of his Budgets. Can the Paymaster General tell us how many taxes she or the Chancellor of the Exchequer have abolished over the past six years, in addition to the 53 extra taxes that her Government have created?

Dawn Primarolo: I stress to the hon. Gentleman that the tax law rewrite project is not about simplification as it is understood within the tax debate, but about ensuring that the existing legislation is easy to understand. I can give him one clear example; there are many. The Government removed the tax relief for private medical insurance, which a Government of his party would apparently want to add to the system. That relief was complex, expensive and made no progress at all in terms of its use. I venture to say to the hon. Gentleman that if he suggested to business that the Government should remove capital allowances from the statute book

Tim Loughton: Taxes.

Dawn Primarolo: Well, he needs to be clear. The tax system and its complexity is made up of many areas. People want relief when it will help them, despite the fact that it brings complexity, but do not want complexity if the relief goes to someone else.

John Bercow: rose

David Cameron: rose

Dawn Primarolo: I have already given way to the hon. Member for Buckingham, so I shall be fair to the hon. Member for Witney (Mr. Cameron), who is rising for the first time.

David Cameron: I am grateful to the Paymaster General for giving way. I am enjoying this debate more than some of us may have expected. Given that the rewrite has been delayed, can the right hon. Lady explain how much of that delay is due to the length of the Budgets of this Chancellor who, I believe, holds the record for the three longest Budgets in our history?

Dawn Primarolo: The tax law rewrite project has not been delayed. I was being generous to the previous Administration, but that was clearly a mistake on my part. When the previous Administration made their original assessment that the entire tax code could be rewritten in five years, they were a tad optimistic, and that would be an understatement.

David Cameron: Will the Paymaster General give way?

Dawn Primarolo: I know that hon. Members are enjoying the debate enormously, although it has taken a slightly different turn than I anticipated. I assure them that the rewrite is necessary because the central objectives and the central pieces of legislation involved in the tax law rewrite have been in place for some considerable time.

John Bercow: rose

Dawn Primarolo: Before I give way to the hon. Gentleman again, I should check that no other hon. Member is waiting in the queue. If not, I shall gladly give way to him before I make progress on my speech, for which I am sure he is waiting with bated breath.

John Bercow: I look forward to it with bated breath, eager anticipation and beads of sweat upon my brow. However, I must implore the Paymaster General to widen her intellectual horizons. Tax law rewrite and tax simplification need not be mutually exclusive. In the interests of good governance, she would be well advised to take note of the seminal ten-minute Bill on tax simplification that my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) introduced in the last Parliament, as well as a similar Bill that I introduced for the edification of the House on 6 June 2000.

Dawn Primarolo: I always follow closely everything that the hon. Member for Buckingham says on the Floor of the House, irrespective of whether I agree with his allegations.
	The tax systemin terms not only of the language of the legislation and its accessibility to those who wish to use it, but also of balancing fairness, certainty and continuity for business with ensuring that all taxpayers get a fair response from the tax systemdoes not always lend itself easily to simplification. Simplification can be unfair, short and discriminatory, like the poll tax. I am sure that hon. Members will therefore agree that I should move on to consider the Bill.
	It is beyond the project's remit to make any change in the main tax policies. However, as the long title suggests, the rewrite can encompass minor changes in detail that further improve the Bill. Examples include: new provisions to fill gaps in existing legislation; incorporating extra statutory concessions; abolishing obsolete material, and correcting minor anomalies. Major changes to tax legislation are matters for the Finance Bill alone. Hon. Members who want to discuss the complexity of the tax system should make their points during consideration of that measure, as they do every year.

Eric Forth: Will the Paymaster General give way?

Dawn Primarolo: I have been very generous. I appreciate that the right hon. Gentleman is the only Conservative Member to whom I have not given way and I shall therefore allow him to intervene later so that he does not believe that I am persecuting him. First, I should like to make a little progress.
	The Joint Committee focused on the minor changes and satisfied itself that their significance was small and thus within the Bill's remit. The Joint Committee also noted the wide public scrutiny of the Bill, especially the minor changes, which the consultation process clearly flagged up. The project drops any proposed changes that do not fulfil the public scrutiny test.
	There is a rigorous system of public consultation for the rewrite Bills. For example, three exposure drafts and a draft Bill were published for formal consultation before the current measure was issued. Meetings have taken place with representative public bodies and informal contact has been made by electronic means with various interested parties.
	The Bill is the second measure to emerge from the project. The first dealt with capital allowances two years ago. Tax professionals and other users warmly welcomed the Capital Allowances Act 2001. On Second Reading, I said that I was gratified to read the comments of a leading tax author, who wrote:
	For those learning about capital allowances for the first time, the Capital Allowances Act 2001 is an unqualified blessing. Besides consolidating the old law into one Act, the new legislation is much more clearly laid out than the patchwork of legislation which it replaced.
	That is considerable praise.
	I want to consider the second rewrite Bill. It makes a start on the rewrite of income tax by rewriting schedule E. Approximately 25 million people are taxed under it, giving rise to more than 90 per cent. of total income tax. The charge to income tax is currently broken down into several schedules. They have come and gone, but we currently have schedules A, D, E and F.
	Schedule E deals mainly with income from employment but also includes some charges on pension income and social security benefits, when they are taxable. The Bill covers the current schedule E provision. It brings together all provision for pension income in part 9 and therefore includes even pensions that are currently taxable under schedule D. It also includes the primary legislation for pay-as-you-earn. In the spring, in response to users' representations, the project will publish for consultation a complete draft of the rewritten pay-as-you-earn regulations.
	The Joint Committee concluded that the Bill was a welcome clarification of existing law and would be easier to use and more accessible to Parliament, the judiciary, informed professionals, business people and other users. Various techniques have been used in the Bill to effect that.
	The first and most important element is the imposition of a coherent structure. Instead of the ramshackle order of provision in existing legislation, the Bill presents all the material logically and groups linked topics. For example, all provisions dealing with taxation of benefits in kind are drawn together to form a benefits code. And, for the first time, all legislation for share-related remuneration is brought together, including, for instance, the various types of share scheme and share option plan.
	Another feature that makes the Bill easier to use is the inclusion of plenty of navigational aids for the reader, such as introductory scene-setting chapters and signposts to other relevant provisions. All those are designed to help readers find their way through this large body of legislation. Other features of the rewrite include shorter sentences, modern language, more consistent definitions and, where it is helpful, more use of reader aids such as formulae, tables and method statements.
	All that combines to make a new style of tax law that is more accessible, easier on the eye and altogether more user-friendly. That is evidenced by public reaction. For example, the Confederation of British Industry described the Bill, as published in draft last summer, as
	a very great improvement on the existing legislation,
	and the Institute of Chartered Accountants in England and Wales said it was
	another major step forward in improving the intelligibility of UK tax legislation in areas of the law that affect the majority of taxpayers.
	The title of the Bill is self-explanatory. It is a Bill to
	Restate, with minor changes, certain enactments relating to income tax on employment income, pension income and social security income; and for connected purposes.
	That is its limit. It is not a tax-reforming Bill. It is, however, an important Bill, and it is also a success. I am firmly convinced that it will make things better for everyone who uses tax legislation.
	Before I finish my speech I will give way to the right hon. Member for Bromley and Chislehurst (Mr. Forth), if he still wishes to intervene.

Eric Forth: The Minister can now claim almost to have achieved a full house, or a running flush, or whatever the appropriate term may be.
	In paragraph 3 of the Joint Committee's first report, we are told
	The Committee is satisfied that the only changes that the Bill makes to the existing law are of such minor significance that they need not be referred to the attention of Parliament.
	I must confess that phrases such as that cause me some concern. I take the view that nothing is of such minor significance that it need not be referred to Parliament. While I accept that the process we are now undergoing constitutes a reference to Parliament, what reassurance can we have that these matters are indeed of such minor significance? Even if they are of minor significance, why is there an implication that the rest of us need not be bothered about them?

Dawn Primarolo: Extra-statutory concessions would not normally be in the body of the tax legislation, but would be used alongside it. One example of a minor change would be the incorporation of such a concession in the legislation.
	The right hon. Gentleman suggested that he might want to elaborate on his point. If he looks at the explanatory notes, he will see that every minor change in that category is flagged up. The notes explain what the change is, and where it can be found in the Bill. Committee members focused specifically on those changes to satisfy themselves as to the procedure. As the right hon. Gentleman knows, the Committee considering the Bill was not dissimilar to one that would consider a consolidation Bill. It is a Committee of both Houses, in which the Government do not carry their automatic majority. Its discussions follow a slightly different procedure from those in other Committees, and it is able to call independent witnesses if it so chooses.

John Burnett: Will the Paymaster General give way?

Dawn Primarolo: This is the very last time that I shall give way before I sit down.

John Burnett: I am extremely grateful to the Paymaster General for giving way. Are those the only changes that are being made through this legislation? I had heard that one or two others are perhaps being made, particularly with regard to pay-as-you-earn regulations, some of which may well have been ultra vires since about 1960.

Dawn Primarolo: I wish I had had written notice of that question. As I said in my opening remarks, the PAYE regulations are being re-drafted and are going out for consultation. They will be fully scrutinised through such public consultation before they are updated.

David Cameron: rose

Dawn Primarolo: I have been extremely generous in giving way, and if hon. Members want to make other points during the debate, I shall of course pick up on them, if I can catch your eye at the end of the debate, Mr. Deputy Speaker. I commend this Bill to the House.

Stephen O'Brien: Let me begin by noting that when my colleagues saw that the Paymaster General would be taking this very interesting measure through the House on Third Reading, they could not resist packing the Chamber to listen to her. Hers has been a useful opening to this important provision, which affects everybody in this country who has income.
	This Third Reading debate follows Second Reading upstairs in Committee on 16 December, and the formal granting by the House of a Second Reading two days later. I thank the Paymaster General for the lucid and comprehensive way in which she has set this important Bill before the House[Interruption.] She seems to be implying from a sedentary position that that might be the kiss of death, but I should like to thank her for the courteous and patient way in which she dealt with numerous interventions from my colleagues, who on this occasion are themselves numerous. Collectively, they have provided a remarkable fount of wisdom to assist her in today's discussion. I hope to cover some of the points that they made in those interventions, to the extent that I can possibly add to the answers already given.
	As the Paymaster General said, this is the second Bill to emanate from the tax law rewrite project. The first became the Capital Allowances Act 2001, which applies primarily to businesses. This Bill has a much wider application and involves many of our constituents, which is why it has attracted so much interest and attention. It is no mean Bill, as it consists of 725 clauses and eight schedules. That may come as no surprise, given that it deals with the significant arena within the overall income tax field of earnings and pensions and, as she rightly said, of social security income.
	Against the background of the introduction of income tax in 1799, the Bill seeks to encapsulate law that has more than 200 years of history behind it. Given the Bill's sheer size, right hon. and hon. Members will doubtless have found that the best way to gain the clearest possible understanding of itgiven the remarkable speed with which my colleagues have attended to it, they must have used this techniqueis to start with the exceptionally helpful accompanying explanatory notes, and then to contrast and compare provisions and expressions in specific parts of the Bill with what they replace.

Greg Knight: May I associate myself with my hon. Friend's remarks about the Paymaster General?
	Has my hon. Friend received any assurances from the Government that the whole rewrite process is not putting undue burdens on the office of the parliamentary draftsman? I am among those Members who want more pre-legislative scrutiny. The Leader of the House has told us that there are difficulties due to the pressure of work on the parliamentary draftsmen. This processworthwhile though it isshould not mean the neglect of other work that I regard as more important.

Stephen O'Brien: My right hon. Friend raises a fundamental and important point about both the rewrite project and the pressure on parliamentary draftsmen generally. Under the ghastly guillotining procedure, the bulk of legislation is passed with no scrutiny, which puts even greater burdens of responsibility on the parliamentary draftsmen.
	Later, in what I hope will be relatively short remarks, I shall ask the Paymaster General to answer particular questions, one of which will address the point that my right hon. Friend has raised.

Eric Forth: My hon. Friend will have seen that the Order Paper helpfully notes that this debate can continue until any hour, so I hope that he will not deprive the House of his research and comments on the Bill by feeling any time constraints whatever. The House is at my hon. Friend's disposal. We want to hear what he has to say until any hour, so I hope that he will take every advantage of that.

Stephen O'Brien: I am most grateful to my right hon. Friend. No one in the House has a greater reputation than my right hon. Friend for day-in, day-out commitment to parliamentary scrutiny and for using this Chamber as the proper forum for debate and holding the Government to account. I noted the words on the Order Paper and, as we explore the issues, we may be glad to avail ourselves of the opportunities that they offer us. Under the hideous new hours to which we are subjected, the 10 o'clock motion is now the 7 o'clock motion, so we shall have to contend with that. If my right hon. and hon. Friends and, indeed, right hon. and hon. Members from other parties find that they are fully engaged with the issues, they may feel that they need time to explore them.
	These important issues relating to income tax apply to many citizens.

John Bercow: The compassionate instincts of my right hon. Friend the Member for East Yorkshire (Mr. Knight) are never far from public view. Does my hon. Friend the Member for Eddisbury (Mr. O'Brien) agree, however, that my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) is indeed right, and that it is especially incumbent on my hon. Friend to discharge his responsibility and to offer us his exegesis of the work and lucubrations of the parliamentary draftsman, as represented by the 13 major publications in the form of exposure drafts issued during the past five years?

Stephen O'Brien: I am grateful to my hon. Friend. I wonder whether exegesis might not qualify for the tax rewrite project itself, but I take his point on board. In what I thought were going to be brief opening remarks, I was trying to show that I had genuinely tried to understand this vast mass of documentation before we allow the House to enact the measure. I hope that gives my hon. Friend some comfort.
	I am confident that the Bill is a genuine stride forward in making our existing primary, direct income tax legislation on earnings and pensions clearer and easier to use. I do not propose to take up too much time itemising, contrasting and comparing each clausesave to admit to donning an anorak for that purpose. With a wet towel wrapped around my head, I have studied the Bill. In my view, the Joint Committee has done a truly excellent and admirable job.

Mark Hoban: Does my hon. Friend share my concern that a Bill of such magnitude and importance was covered by only four sittings of the Joint Committee? Notwithstanding that it received extensive pre-legislative scrutiny, should not the House spend more time on a Bill of such magnitude and importance?

Stephen O'Brien: I believe that the Paymaster General had a genuine point when she made it clear that the process of consideration involving a Joint Committee of the House was designed to tap into the vast expertise and experience of individuals who are able to bring their work to the assistance of the House, in supporting that which we as legislators want to achieve: a rewrite in much clearer, user-friendly language of a measure covering the important subject of income tax law as it relates to earnings and pensions.
	Although it may seem on the surface that there has been less than the full number of debates that my hon. Friend might have expected, I am satisfied with the process because so much has been done through a number of Committees that have reported to each other. Although it is up to the Paymaster General to give my hon. Friend the reassurance that he seeks to pass on to his constituents, I have taken the trouble to satisfy myself that the process has been well designed and properly adopted.

Mark Hoban: Has my hon. Friend read the speech that my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) made in the Second Reading Committee about the process that led up to the Bill? He said:
	It is rather difficult to meet our duty of scrutinising legislation when these Bills come here after so much consultation, which usually leads to the full-blooded support of every professional body for the work that is produced.[Official Report, Second Reading Committee, 16 December 2002; c. 10.]

Stephen O'Brien: No doubt the Paymaster General has listened to my hon. Friend's point with care and wants to comment.

Dawn Primarolo: I am sure that the hon. Member for Fareham (Mr. Hoban) is not seriously suggesting that the Government should not make every effort to ensure that legislation is properly drafted before it reaches the House, simply so that outside bodies can give Opposition Members something to say in debate? Surely the Government should be applauded for undertaking so much consultation and ensuring that legislation before the House is of the highest possible standard.

Stephen O'Brien: The Paymaster General almost takes the words out of my mouth. It is wholly proper and appropriate that, in addition to the genuine tribute that I have paid to the Paymaster General, the House should record its gratitude to a number of the prime movers. The tax law rewrite project was established in December 1996 by the then Chancellor of the Exchequer, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), who gave it the authority and impetus that has led to the overall project's success so far. My right hon. and learned Friend would like to have been with us today but is unavoidably detained.
	I pay tribute to my right hon. Friend the Member for Fylde (Mr. Jack), who is elsewhere on Select Committee business. These ghastly hours mean that we all have to be in too many places at once. I pay tribute also to the hon. Member for Warwick and Leamington (Mr. Plaskitt), who has dedicated himself with great assiduity to the Bill. [Hon. Members: Where is he?] He is not in the Chamber, but that is forgivable, given the absence of my right hon. and learned Friend.

Eric Forth: As ever, my hon. Friend is a true gentleman in seeking to exonerate the other right hon. and hon. Members whom he mentions. However, if the Bill is as important as the Paymaster General suggestedand as important as my hon. Friend suggests by giving so much of his time to itis he puzzled and disappointed that the very people to whom we should have looked for guidance today deem it to be more important to be elsewhere, rather than in the Chamber assisting us with the knowledge and experience that they gained in Committee? My hon. Friend and the Paymaster General apart, are we not left rudderless on the matter as a result?

Stephen O'Brien: I am somewhat disappointed that my right hon. Friend feels that I am not up to the task. The absence of the right hon. and hon. Members is understandable in the circumstances. However tempting it is to make a cheap point by condemning hon. Members for not being present in the Chamber, I shall not do so. It is encouraging, however, that so many of my right hon. and hon. Friends have felt it necessary to ensure that the Bill is given proper scrutiny on Third Reading. The Bill is the result of a long and rigorous process and I therefore hope that my right hon. Friend will gain some comfort from the knowledge that proper scrutiny has been granted to it. During the debate, he will have many opportunities to assure himself that that is the case.

Greg Knight: May I reassure my hon. Friend that we make no criticism of his handling of the matter? He is a powerful advocate. However, can he reassure me that nothing in the Bill alters the ruling in the well-known revenue case of Hochstrasser v. Mayes?

Stephen O'Brien: AC 376. We should pay tribute to the hard work that has gone into the explanatory notes that support the Bill. As is so often the case on other Bills, they are exceptionally helpful to Members. On this occasion, my right hon. Friend will find all the answers that he needs, and it would be tiresome and unnecessary to read out the paragraph concerned.

David Cameron: My hon. Friend's wet towel exerciseas we shall now have to call itof looking through the Bill was obviously complete. Did he consider clause 700, which deals with the taxation of share options? Does he share my concern that the proposed law may differ from the existing law, because the Bill mentions taxing an option the moment that it is assigned, instead of the moment that it is exercised? In that case, the person holding the option would not have made a profit out of it, but would be taxed on the nominal value of its assignation.

Stephen O'Brien: Accountability for the content of the Bill lies ultimately with the Government, but if it is of assistance to my hon. Friend in seeking further assurance from the Paymaster General, I can tell him that the annexe to the Bill contains a list of 183 changes, which are classified as minor.

Eric Forth: Oh!

Stephen O'Brien: My right hon. Friend will no doubt be interested to learn how those changes are classified and how the House may be assured that they are not a cause for concern. He will then have to decide whether he is satisfied with the explanation.
	If my hon. Friend looks at the schedule 183 changes, he may well find that the change in clause 700 is classified as minor. I shall look it up if he needs further clarification, but his challenge is appropriate in this debate. He mentioned the wet towel. I assure him that it was very wet, but I am satisfied that the change is in line with the original intent not to inflict unnecessary burdens on users of the Bill.

John Bercow: Will my hon. Friend allow me to intervene?

Stephen O'Brien: This must be the last intervention, as I need to get to page 2 of my speech.

John Bercow: My hon. Friend is typically generous. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said in his Budget speech in November 1996 that the project was as ambitious as an attempt to translate War and Peace into lucid Swahili. He and other senior and influential Members are too busy to be here today, but does my hon. Friend think that they would approve of clause 130 on the notional price of an accessory?

Stephen O'Brien: I was born in Tanzania and my father speaks fluent Swahili. The Bill is more difficult than the translation suggested by my right hon. and learned Friend the Member for Rushcliffe. I suggest that my hon. Friend looks at the definitions of any terms contained in inverted commas. That is always useful in tax matters. He can then decide whether notional price amounts to correct English usage. It is helpful to wear an anorak when comparing and contrasting this Bill with the wording in the original legislation.
	I want to make progress. The Paymaster General was exceptionally generous in giving way to interventions, and I do not want to be less so. However, Labour and Liberal Democrat Members seem unwilling to intervene.
	As I was saying, I pay great tribute to my right hon. and learned Friend the Member for Rushcliffe, but also to my right hon. Friend the Member for Fylde and to the hon. Member for Warwick and Leamington, both of whom served with great dedication on the steering committee overseeing the project. I salute all the steering committee members, under the indefatigable, focused, charming and determined chairmanship of my noble Friend Lord Howe of Aberavon, which has been patently effective.

George Osborne: Will my hon. Friend give way?

Stephen O'Brien: I should like to make progress, but I appreciate that my hon. Friend wants to make a relevant point.

George Osborne: We are praising the work of the Joint Committee and approving the project, but the regulatory impact assessment states that the costs of the rewrite project are almost impossible to quantify in advance, and that it is impossible to arrive at an objective measure of the benefits. Does my hon. Friend and constituency neighbour agree that it is surprising to be considering a Bill whose costs and benefits remain unknown to us? I hope that the Paymaster General will at least say something about the costs.

Stephen O'Brien: My hon. Friend and constituency neighbour raises an important point, which the Paymaster General and I discussed in the Second Reading Committee, and I shall refer to it a little later in my remarks. If my hon. Friend will be patient until I reach that point, I shall perhaps be able to deal with it in the round and he will get a more contextual answer. We have to bear in mind where the offset of the costs may arise, as well as the actual numbers. However, given the assurances in the regulatory impact assessment, it would be fair to say that, overall, they are relatively de minimis.
	I add our genuine thanks to the many members of the accountancy and legal professions and taxpayer representatives who have taken part in the consultative committee that has reviewed this work, as well as to all those who have participated in the consultation, among whom are those listed on pages 3 and 4 of the explanatory notes, which the Paymaster General so helpfully read out during her opening remarks in response to an intervention made by my right hon. Friend the Member for East Yorkshire (Mr. Knight).
	I make no apology for taking time to pay tributes because the House would be unable to undertake such work without the support and expertise of so many people dedicating considerable time and effort. Our gratitude rightly extends, equally, to the Inland Revenue staff who have been involved and, not least, to the team of parliamentary draftsmen, to whom my right hon. Friend the Member for East Yorkshire referred, who have grappled with this complex and continuing project.
	It is important to note that the Bill, as with all rewrite Bills, is not intended to change the effect of current legislation in any significant way. That point was made by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth). However, each rewrite will include a number of minor changes to the lawfor example, to legislate for extra-statutory concessionsand this one is no exception.
	As I said earlier, 183 changes are listed in the second volume of the Bill. I ask the Paymaster General to highlight a number of those changes, including additional examples of where this project has afforded the opportunity to discard obsolete provisions, during our proceedings this afternoonit is rapidly becoming this eveningto underwrite the crucial element of trust that has to inform our proceedings.
	In the Second Reading Committee, I raised that issue with the Paymaster General and asked her to flag up those changes well in advance so that, in addition to the process being transparent, it continues to carry with it the crucial trust and integrity by which it has been characterised to date. That should provide some of the assurances to which my right hon. and hon. Friends alluded in earlier interventions.
	Although it was estimated that the rewrite project would involve 6,000 pages of legislation and initially take about five years, it has long since been recognised that the original programme would not be attainable. I agree with the Paymaster General that it is more important for work to be done properly, rather than quickly, as she said in a written answer on 31 January 2002.
	Since its inception, this project has rightly attracted interest and support across the political spectrum, as well as in the business and financial services community. We have to recognise that the whole tax law rewrite project is a continuing one and that it will improve the democratic settlement between taxpaying citizens and the state in terms of transparency, communication and clarity, as is our obligation, only if it maintains its momentum and the Government remain wholeheartedly committed to it.
	I have no doubt, frankly, that that is the Paymaster General's intent, but I ask her to confirm to the House that, as a minimum, the same resourcesnot least the availability of appropriately skilled and experienced parliamentary draftsmenare maintained and supported in moving on to the next stage in rewriting the PAYE regulations, which, as she rightly said, are out to consultation.
	In answer to an intervention made by the hon. Member for Torridge and West Devon (Mr. Burnett), it is important to recognise that the Paymaster General would help the House enormously if she were to tell us the programme for the next stage of the project. Although the rewrite of PAYE regulations was not within the original remit of the rewrite team, it has rightly been included in response to representations. Will the Paymaster General confirm that resources will continue to be made available for a timetable within the overall tax rewrite project? Will she push the project forward?
	Will the right hon. Lady tell us what resources will be made available for the third Bill of the rewrite projectcovering trading, property, investment, miscellaneous, and exempt incomein 200405? The boundary between the Bill that we are discussing today and the third income tax Bill has, understandably, been fluid. However, it was said that the boundary definition would be finalised during 200203. Will she give us that boundary definition?
	In the Second Reading Committee, there was confusion in one quarter, but it is important to acknowledge that this Bill, and the whole rewrite project, is not aimed at the simplification of tax policy. The Paymaster General rightly said that we must distinguish between clarification of tax, in the rewrite project, and simplification of tax, which is a separate project. The rewrite project concentrates on codifying English tax law. However, there is an important qualification. Were my right hon. Friend the Member for Bromley and Chislehurst still here, he would be able to hear the assurance that I promised. I will tell him that tomorrow's Hansard will make riveting reading. The qualification is that, under Standing Orders Nos. 60 and 152C, it is for the House, in scrutinising the Joint Committee's work, to determine tax law. The Committee's judgment on any changes made by the Bill will have to be scrutinised by the House in order to determine whether the changes are minor or not. That goes to the heart of the point that my hon. Friend the Member for Witney (Mr. Cameron) made a few minutes ago. That point underscores the point that I made earlier about trust. The powers of the House must not be prejudiced. On the issue of trust, I ask the Paymaster General to take a few examples from note 183 in the annexe to volume 2 to show that they are indeed minor.
	This Bill is before the House as a result of considerable work and time devoted by many experts and professionals, who have had to consider a number of what are called exposure drafts. There has been concernand even complaintsabout a new syndrome, which has become known as exposure draft fatigue, or EDF. The 200203 tax rewrite annual plan says:
	In order to build on the consultation processand with the full support of the project's Steering and Consultative Committeeswe now take a more flexible approach to the development of draft legislation prior to a final round of formal consultation. This includes more use of the Internet and, as soon as Departmental IT resource permits, we hope to set up a discussion group for draft legislationthat is an Internet page where people can post comments, reply to comments posted by others, and read the project's response.
	My noble Friend Lord Howe of Aberavon has taken that point on board and the process has become more streamlined. It is, I would say, the better for it. There is now a considerable amount of material on this project, which the Inland Revenue has helpfully published on its internet site: www.inlandrevenue.gov.uk/rewrite/index/htm.
	Accompanying the Bill is a regulatory impact assessment, and some points have already been made about it. It is an important and useful document that was signed by the Paymaster General and discussed in Committee. While recognising that it is difficult to quantify the costs to taxpayers, it is important to recognise that there will be some costs involved in retraining tax practitioners so that they become familiar with the new structure. However, the regulatory impact assessment is fair in regarding the costs likely to be offset or, taken as a whole, to be relatively de minimis.
	Will the Paymaster General confirm the Inland Revenue's view contained in the regulatory impact assessment? It said that although
	it would be difficult to quantify most of the costs in advance, and impossible to arrive at any objective measure of the benefits . . . the interested parties, whom we consult on our work, still firmly believe that any costs will be more than outweighed by the benefits flowing from the project.

George Osborne: Unfortunately, I have not read the Hansard report of the Committee discussion on this point, but was there any discussion of the costs to the Inland Revenue of the project? What are the direct costs to government from all the work that has been done on the rewrite, the use of the parliamentary draftsmen and so on?

Stephen O'Brien: I am grateful to my hon. Friend, not least for his rapier-like persistence that we should at all times discharge our duties to look out for the waste of taxpayers' money. He will see in paragraph 28 of the regulatory impact assessment that the cost to the Inland Revenue of producing the Bill has been estimated at about 7.6 million spread over a period of six years that started in 1997 and goes through to the current financial year. As the assessment says:
	These costs can in part be offset by the costs that would have been expended on the consolidation of the ICTA 1988
	the Income and Corporation Taxes Act 1988
	and the subsequent Finance Acts, but for the work of the project.
	Paragraph 29 adds:
	There will also be a small cost to the Inland Revenue in updating the relevant parts of the guidance manuals and internal training material.
	There is, therefore, a cost, but it has to be considered in the round. As my hon. Friend heard earlier, we have to consider whether making income tax lawparticularly as it relates to earnings and pensions and income from social securityeasier to understand represents value for money in terms of the significant cost that is incurred. I believe that it does.

Greg Knight: Is there not another cost that I touched upon earlier? That is the cost of a possible lack of scrutiny that results from the fact that the parliamentary draftsmen have been overworked by this project. They are therefore not able to devote their time to producing every piece of proposed Government legislation in draft. That is what we want. The Leader of the House said that he also hopes that that will happen.

Stephen O'Brien: My right hon. Friend makes an interesting point. In a sense, I defer to him because he has experience in government and I do not. It is my impression from what I have managed to glean as a member of Her Majesty's official and loyal Opposition that the parliamentary draftsmen are not only an expert but a somewhat scarce commodity available to Government. They are under enormous pressure given the volume and weight of Bills that are continually being introduced. It is important therefore to recognise that we seek an assurance from the Paymaster General that the resources that have been devoted effectively to date will, at least, be maintained at that level. That will enable us to move ahead with the third Bill on the tax law rewrite in the 200405 Session and the additional rewrite on the PAYE regulations that will affect everyone who earns. I hope that that reassures my right hon. Friend, but the Paymaster General may have an opportunity to add to my remarks.

Mark Hoban: I am grateful to my hon. Friend for giving way again. He has been very generous at taking interventions.
	My right hon. Friend the Member for East Yorkshire (Mr. Knight) talked about the burden on parliamentary draftsmen as a result of the process of pre-legislative scrutiny. My hon. Friend has referred to exposure directive fatigue. In parallel with parliamentary draftsmen becoming involved, external bodies also have to look at these matters. It is not just the tax law rewrite that involves professional advisers. Before the last Finance Act, there was a considerable input from practitioners on capital gains tax. Is my hon. Friend concerned, as I am, that professional bodies may be devoting a great deal of resources to tax law rewrite, when they may have other tasks because of the Government's programme?

Stephen O'Brien: I am grateful to my hon. Friend, because what he has said helps me to repeat the gratitude of the whole House to the enormous number of experts and practitioners who, because they are so expertone can place enormous reliance on them for their judgement and expertiseare exceptionally busy in their professional and other practical work. To have a satisfactory consultative body that is effective in support of the tax law rewrite project, which I believe our consultation Committee is, inevitably puts an enormous strain and demand on the time and effort of those people, who are already very busy in their own right.
	It was exposure draft fatigue, not exposure directive fatigueif I may gently correct my hon. Friendthat led to the establishment of use of the internet for dialogue, rather than the many meetings and paper drafts. Those of us who have been in professional practice, as I was before I entered the manufacturing industry, know that it is very time consuming to have to measure one draft against another. On the internet, as my hon. Friend well knows, time can be saved, not least because, in a rather professional way, there is a chat room to exchange good ideas.

Eric Forth: I worry when I start to hear talk of chat rooms and e-things. Is not my hon. Friend worried that a large proportion of the population is disfranchised by this ghastly modern process? Every time I hear glib talk of internet chat rooms and the like, it comes to my mind that the latest figures show, I think, that only 40 per cent. of households are connected to the ghastly internet. Therefore, potentially 60 per cent. of households are disfranchised from the so-called consultation process. How do we non-cyber folk get to know about these things, and how are we simple, non-electronic people, consulted?

Mr. Deputy Speaker: Order. Before the hon. Gentleman responds, I would point out that we are going a little wide of the Third Reading of the Bill.

Stephen O'Brien: I am grateful for your guidance, Mr. Deputy Speaker. Indeed, I could almost say rescue. I was concerned that my right hon. Friend might be referring to E-substances in food, given the nature of his question at one point, but I understand where he is coming from in terms of his non-cyber existence. I recognise that he inhabits the non-cyber world in a very firm and, I suspect, unshakeable way. But when he quotes statistics as to who is and is not hooked to cyber, it is important to recognise that we are not talking about the broad citizenry at large. We are talking about the professionals and those with particular expert knowledge in the field, who can help on the consultation Committee and also as consultees in the process. It is also important to recognise that it would be very difficult for them to do their professional work if they were not prepared to join what is regarded as the more modern e-world, with all its opportunitiesand indeed shortcomings, as my right hon. Friend is never remiss in observing and pointing out to the rest of the nation.
	I shall move forward as rapidly as I can with opening remarks that have taken somewhat longer than I had expected. I support and reiterate what my right hon. Friend the Member for Fylde said in our Committee proceedings, that we not only hope that the precedent of issuing a regulatory impact assessment of the Bill will be followed for all future tax law rewrite projects, but also believe that it should be applied to all future tax changes, to include economic tests and an analysis of what the Chancellor expects any tax measure to achieve.

Dawn Primarolo: Has the hon. Gentleman been following the same debate in the United States, where Congress and the President disagree on how to make an assessment on that basis? Given that they cannot resolve the problem, is he seriously suggesting that it would be helpful for us to engage in such a dispute?

Stephen O'Brien: In a sense, the Paymaster General gives me the assurance that I seek. The fact that she is conscious of the debate in the United States means that Treasury Ministers are keeping a watching brief on it. That gives me some encouragement. The model in the United States is often much more fruitful than models nearer to home. It will be helpful to see how the debate develops and howif at allthe Americans manage to resolve the problem. If it is resolved satisfactorily, it will help to underpin the settlement between the citizens of this country who have to pay tax and the state, as represented through the Executive, which takes and applies the money. We need to ensure that they have the best possible information to understand how the money is valued and what is expected up front.
	It is no different in the private and commercial world. It is no bad thing for hon. Members to experience the discipline of working in the real world that everyone else inhabits before they come here. If someone wants to raise money by going to a bank, he would be held to his business and repayment plans and would need to have an idea of how things might work out. That is not the habit of Government, as the Paymaster General knows. It is worth considering such a project, especially on the back of what is being considered in the United States. I am grateful to know that that might be under the gaze of Treasury Ministers, and we look forward to further reports on it.
	As my right hon. Friend the Member for Fylde said in Committee, tax legislation is too often enacted
	on a wing and a prayer, wondering whether it will do some good or hopingfor political reasonsthat it will,
	but all it can add is further complexity. Therefore, for all users of tax legislation, the overriding need is for both clarity and certainty. Indeed, the Paymaster General made that point in her opening remarks. Although the rewrite project addresses clarity, I hope that the Paymaster General and the Chancellor will listen carefully, especially as the Budget is coming soon and the planned tax increases, which will hit everyone's pockets, are just 53 days away. They need to act on that, not least to make it easier for tax practitioners and taxpayers, but also to gauge, as my right hon. Friend the Member for Fylde said, the before-and-after effects of tax measures. That is, perhaps, the equivalent of the proposal, coupled with a post-audit review that one would expect in any walk of private business and commercial life. My hon. Friend the Member for Chichester (Mr. Tyrie) touched on that in the context of the compliance issue. I am grateful that the Paymaster General is nodding. She obviously acknowledged the importance of that, and I look forward to further announcements from the Treasury.
	I hope that I am pushing at an open door, because in Committee the Paymaster General concluded with the words:
	Tax legislation is not always perfect. It is, however, about striking a balance between fairness and enabling competition, and it is about giving certainty.[Official Report, Second Reading Committee, 16 December 2002; c. 12-17.]
	That is a fair test and we need to adhere to it.
	As we said in Committee, there would be no harm in submitting the document for scrutiny by the Plain English Campaign. That would help with clarity. Some of us have tried to earn a return for shareholders' money while at the same time supplying high-quality goods and services that customers want at a fair price. Many of us who have worked in the manufacturing, wealth-creating side of the economy have had to produce annual reports, especially if we have done that on the back of other people's money. In this ever challenging, regulated and, at times, politically correct world, annual reports have to contain all manner of things. They assume that people are always driven by the worst of motives rather than the best. Given the plethora of regulations that have to be satisfied in companies' annual reports, the application of the crystal mark by the Plain English Campaign has been particularly helpful. One of the first companies to use it, to its credit, was the National Westminster bank, in which, I hasten to add, I have no interest. I was going to say that I have no money, but that is another point. The bank's annual reports are a model of their kind, especially as many of the areas that they cover, including compliance and liquidity, are not dissimilar to those covered by the Bill. As part of the rewrite project, it would be exceptionally useful to submit the Bill to the campaign, as it is more likely to be read by private citizens than by businesses, which, with their professional tax advisers, are more likely to read the Capital Allowances Act 2001, the first of the tax law rewrite measures.
	It would be useful to submit the Bill to the Plain English Campaign to discover whether the test that the Government have set themselves satisfies the campaign as well. The campaign would also have to recognise that it is not possible to reduce everything to a small novella. In our earlier debate, there were some interesting examples of fictional novellas from Government Members, who were trying to pretend that they were delivering a critique of Conservative policy. We, however, had the chance at last to hold the Government to account for their disastrous economic policies. I am straying outside this debate, so I shall simply tell the Paymaster General that it would be helpful to introduce a further test in the tax law rewrite project by submitting the Bill to the Plain English Campaign to discover whether it could attain a crystal mark, which would be a signal demonstration of the success of all the fine work that has gone into it.
	Clause 176, as my right hon. Friend the Member for Fylde highlighted in Committee, can be understood with the aid of the exceptionally helpful flow chart on page 72 of the first volume of the explanatory notes. For the assistance of Members following our debate with intense interest, there is another chart on page 91. It is unusual that explanatory notes should include helpful diagrams that make the flow of money readily understandable. In Committee, my right hon. Friend strongly recommended that such diagrams be more widely used, not just as part of the rewrite project but more widely in legislation, not least draft legislation to assist with pre-legislative scrutiny. I, too, urge greater use of that form of explanatory communication, and I ask the Paymaster General to tell us in her winding-up speech whether there are any impediments against the wider use of the technique. Diagrams are included in the explanatory notes, but are notably absent from the Bill. It would be helpful to have a flow diagram, even if only in a schedule or annexe, as our education system relies heavily on computer technology. I know that it would be a burdensome challenge for my right hon. Friend the Member for Bromley and Chislehurst, but the rest of the population is familiar with menu optionspeople are being educated to respond to more diagrammatic ways of learning and understanding. A chart may therefore have a greater resonance with them than the product of the more literary, arts-based education of the past.

John Bercow: Far be it from me to seek to check my hon. Friend's heady and almost Panglossian optimism about pages 72 and 91, and the charts therein, of the explanatory notes, but will he remind the House that, as is customary with all legislation, there is a proviso on the front page of the explanatory notes reminding us that they are to be read in conjunction with, but are in no sense a part of, the Bill? Does he therefore think it necessary to issue a warning that the charts may not be a full, accurate and exhaustive description of the matters to which they relate?

Stephen O'Brien: I thank my hon. Friend for that intervention. I had hoped that he was listening a tiny bit more attentively, as I suggested that the charts were a helpful model that could be incorporated in legislation. I fully accept that the explanatory notes should be read in conjunction with a draft Bill and that they would always be available after a Bill was enacted. None the less, if such information were included in the legislation as a schedule or annexe, it would help us to understand whether it was a genuine, full and fair representation of reality. It would be readily understood by hon. Members as well as all the users who will have to deal with such provisions once they become law. Indeed, it would be reviewed from time to time if the legislation were amended.
	I hope that my hon. Friend the Member for Buckingham (Mr. Bercow) will be reassured by that clarification or restatement of the position that I sought to outline earlier. He is an example to all hon. Members of the benefits of a tremendous arts-based education, not least because of the great literary prowess that he demonstrates on numerous occasions, as well as his acrobatic ability with the English language. I hope that he will recognise that not everybody's mind works completely as his does and that some people may find the more diagrammatic and figurativeand even, dare I say it, more numerateapproach of some help.
	As I seek to bring what I hoped would be short remarks to a conclusionI do so somewhat desperately, given the late hourI must highlight one area of caution.

George Osborne: Will my hon. Friend give way?

Stephen O'Brien: I am trying not to be delayed, but I shall give way once more.

George Osborne: My hon. Friend referred to the late hour, but I remind him that, as I am sure he knows, the business can continue until any hour. We are still only at 6 o'clock in the evening, which is fairly early in what used to be the parliamentary day.

Stephen O'Brien: I am aware that the business can continue until any hour, but I would not regard it as our proper duty as Her Majesty's loyal and official Opposition to do anything other than use the time of the House effectively, as I have been seeking to do. Given the shortness of the earlier debate, which occurred in Opposition time and dealt with the absolutely crucial matter of holding the Government to account for their failed economic policies and failure on public services, the way in which Labour Members used that time was questionable. I therefore feel no compunction or compulsion to feel constrained except by the need to hold the Government properly to account in the Chamber, where we have the opportunity to do just that. If it takes us until any hour to do that, we will take until any hour, but I hope that that will not be necessary and, given the number of questions that I have asked, I am looking forward to the assurances that I am sure the Paymaster General will be able readily to give us.
	I was about to deal with an area of caution. Everything that today's Chancellor does works in contrary motion to the underlying principles of the rewrite project. There is growing evidence to suggest that the tax system has become more complex, especially in recent years, as a result of the weight and size of tax legislation and the guides written to assist persons or businesses that wish to understand it. The cost of administering the system has grown along with feedback from professional surveys. There has been growing criticism of the complexity of the tax system. Accountants and others have been arguing that the situation is beyond the comprehension of most ordinary taxpayers and is imposing an unnecessary burden on business.

George Osborne: Will my hon. Friend give way?

Stephen O'Brien: My hon. Friend is exceptionally assiduous.

George Osborne: My hon. Friend will be aware that Tolley's Tax Guide, the bible of tax accountants, has grown in size by 30 per cent. in the past few years. Indeed, smaller print now has to be used to accommodate all the extra complication of the tax law that has occurred under the current Chancellor.

Stephen O'Brien: I am most grateful to my hon. Friend. It is clear that he has received the same briefing as me. Indeed, I was about to deal with that point. Tolley's standard tax manual, the bible for tax accountants, has indeed grown by more than 30 per cent. in the past three years. This is a point with which I happen to be familiar, and I am grateful to my hon. Friend for raising it. The Financial Times on 24 November 2001 highlighted the increase in the weight of tax manuals since Labour came to power in 1997:
	Britain's 'tax bible' has grown by more than a third since Labour came to power as the nation's accountants struggle to understand the word of Gord. Tolley's manuals on VAT, income tax and corporation taxthe accountant's favourite reference toolhave had to add a total of 855 pages to explain the gospel according to Gordon Brown.
	A gospel is normally described as good news, so I have to take serious issue with the Financial Times on that. It goes on:
	The three guides, which together have 3,414 pages, are longer than London's residential and business telephone directories. Tolley's has even had to reduce the print size to cram in more.
	When my hon. Friend talked about reducing the size, I was worried that hon. Members might be confused and think that the volume had contracted. Far from itit has grown and has had to reduce its print size so as to cram everything in.
	This is quite an extraordinary record, and one that fully illustrates how this Government's actions are going in contrary motion to the very proper tax law rewrite project that is gaining tremendous consensual cross-party supportand rightly soin the House. Throughout the Chancellor of the Exchequer's tenure in office, a feature of his Budgets has been the sheer size of the subsequent legislation published in each Finance Bill. According, again, to the Financial Times, the door-stopping Finance Bill of 2002, with 140 clauses and 39 schedules, was the third largest ever. The Financial Times states:
	At 488 pages, it is the third-longest in history and it does not even include some of the most significant legislation coming out of the Budget, such as the rise in national insurance contributions
	which we will all have to suffer in 53 days' time. Can you believe it, Mr. Deputy Speaker?

Mr. Deputy Speaker: Order. We are not discussing the Finance Bill this evening. Perhaps we can discuss the Third Reading of the Bill that is before the House?

Stephen O'Brien: I am grateful to you, Mr. Deputy Speaker. I may have taken slightly longer than you think necessary to make my point about the 53 days

David Taylor: Not true.

Stephen O'Brien: I think that the hon. Gentleman is trying to place on record a comment about the question of 53 days. Of course, it depends on whether one is an employee or an employer. Both will face tax rises. The employers' contributions will increase at the beginning of the month and, as anyone who has worked in the real world of industry will know, the employees' contributions will rise at the end of the month, unless they have a special dispensation through their employer or through any other legislation or regulationsthere are plenty of themto change that to another date in the month. So it is 53 days until the employers' contributions will change, and we shall all have to suffer in 53 days' timeor more, depending on whether we are talking about employers' or employees' contributions. Given the appalling attack that this will represent on the pockets of the citizens of this country, I am very surprised that the hon. Member for North-West Leicestershire (David Taylor) should have the gall to highlight this matter in the way that he has done.

John Bercow: I am grateful to my hon. Friend for giving way so generously yet again. Surely the essence of this matter is that the tax law rewrite project has to be viewed in the context of the central charge against the Government, which is that of more complexity, on the one hand, and less information being made available to the public on the other. In that context, what consideration has my hon. Friend given to the verdict of the Treasury Committee, which is very germane to our considerations tonight, that the Chancellor is to be excoriated for his failure to publish the impact of his direct and indirect taxation measures on people in the respective income deciles?

Stephen O'Brien: rose

Mr. Deputy Speaker: Order. I am sorry, but the hon. Member for Eddisbury (Mr. O'Brien) is again being tempted into byways that are not really to do with the Third Reading of the Bill.

Stephen O'Brien: I will certainly take your strictures to heart, Mr. Deputy Speaker, and leave on the record what my hon. Friend the Member for Buckingham has said. I hope that the Government will take serious note of his contribution in that intervention.
	I was seeking to highlight, by way of example, why there is real concern about the consistency of the Government's action in relation to the tax law rewrite project, a crucial element of which is the Bill before us tonight, and to mention the assurances that we wish to see under the PAYE regulations.

Dawn Primarolo: The hon. Gentleman was complaining about the Finance Act 2002, in which the Government took out all the provisions on loan relations which were a complete messand rewrote them, which equates to less pages of legislation.

John Bercow: Fewer.

Dawn Primarolo: I thank the hon. Gentleman for the grammatical correctionfewer pages. The hon. Member for Eddisbury cannot seriously suggest that the Finance Act 2002 entirely comprised new legislation, because a huge chunk of it rewrote legislation that his Government had messed up.

Stephen O'Brien: Hon. Members on either side of the House will have different interpretations, but the recollection of my right hon. and hon. Friends is that the Financial Times was justified in calling that Finance Bill a doorstop, regardless of whether some clauses were taken out.
	Given the consensual nature of the tax law rewrite project, the work of the Joint Committee and my support for what the Paymaster General has done, I hope that she realises that I do not intend to be unfair or difficult. However, there is a question in my mind about the consistency of devoting so much time and so many people to the valuable work on the tax law rewrite project, which is demonstrated by the Bill, and the inevitability of having such large Finance Bills. We do not know what will be in the forthcoming Finance Bill, and the Paymaster General will not disclose any of the contents of the Chancellor's Budget, whenever it takes placeI hope that we will soon be told the date. It will help the future work of the tax law rewrite project if the standards applied to that project are used in the drafting of Finance Bills. I believe that the Paymaster General indicated that that was the case in her opening remarks.

Dawn Primarolo: It is the case that when legislation is rewritten and put into Finance Bills, it is rewritten in the tax law rewrite style. When, for a Finance Bill of a few years ago, we completely rewrote some VAT legislation using the tax law rewrite style, Opposition Members thought that it was a completely new piece of legislation and opposed it on that basis.

Stephen O'Brien: The Paymaster General has the advantage of me, in that I was not party to that. Different interpretations can always be made, but the point is that every year we dedicate ourselves with a great deal of effort to the most important Bill that goes through Parliament, namely, the Finance Bill. I am simply asking the Paymaster General to recognise that it is important to take a consistent approach to the tax law rewrite project and to the framing of Finance Bills.
	The Chancellor's Budgets of 1998 and 2000 were two of the biggest Finance Bills. As regards the 2002 Finance Bill, nine pages set out changes to rates of duty for small brewers, six pages dealt with new tax arrangements for community and amateur sports clubs, 14 pages set out new tax arrangements for vaccines research and five pages were given to revisions to the aggregates levy. Specialists are alarmed by the size of legislation. John Whiting of PricewaterhouseCoopers has said:
	The only thing that keeps it bearable is the fact that we have seen a lot of it before. But for that, we'd be utterly floored.
	In response to the 600-page 2000 Finance Bill, John Whiting, who was then also vice-president of the Chartered Institute of Taxation, said:
	The whole of the personal tax area is ripe for simplification.
	Again, I emphasise that point. We should not confuse the tax law rewrite project with tax simplification. That is another demand that the Government should note.
	On the same subject, Frank Haskew, an executive at the Institute of Chartered Accountants, commented:
	This is out of all proportion to anything we have ever seen before. The volume of tax law has doubled since the 1980s. I do not know how ordinary people have a hope of understanding their tax affairs. Even accountants are struggling.
	The trend of more complex and lengthy tax law is crucial to the debate. We hope that the Government will ensure that the standards that apply to the tax law rewrite project are adopted for all Finance Bills. I believe that the Paymaster General's intent is genuine, but the record to date gives no ground for hope.
	As we rapidly reach the conclusion of my remarks on the subject, it is important to comment on the increasing complexity of the tax system in relation to the Capital Allowances Act 2001, which was the first measure in the tax law rewrite era.

John Taylor: I had not intended to intervene, although I am an expert on income tax because I have paid it for approximately 40 years. However, my hon. Friend said that even accountants were struggling. In my experience, accountants do extraordinarily well out of such monsters as the Bill.

Stephen O'Brien: My hon. Friend makes an interesting and important point. I do not want to decry accountants, because so many experts on whom hon. Members have relied to reach our current position of considering a tax law rewrite Bill are accountants. It is not right to condemn those who are properly and professionally able to make a sensible and sometimes rewarding living out of being experts. Perhaps simplifying the law will make it more challenging for them to earn a crust. That relates to the impact assessments that some of my hon. Friends wanted clarified earlier. I try to emulate my hon. Friend the Member for Solihull (Mr. Taylor) in many respects, but I dread the day when I shall have paid income tax for 40 years.
	I am deeply conscious of your earlier guidance, Mr. Deputy Speaker, about not being tempted to stray too far down alleys, byways and cul-de-sacs by my hon. Friends, who are perhaps struggling to come to grips with the vast array of documentation.
	The Capital Allowances Act 2001 was the first element of the tax law rewrite project. My noble and learned Friend Lord Howe of Aberavon said:
	The Finance Act 2000 . . . is almost twice as long as our only rewrite product so farafter about four years' workthe Capital Allowances Bill. As I said last summer, 'It is like trying to repaint Brighton Pier at a time when its owners are trying to extend it to the French coast.'
	That has a sad resonance in the light of recent events at the West pier and the Palace pier in Brighton. My hon. Friends and I send our condolences to people in Brighton. Lord Howe's comment was so apt that I quoted it as a memorable illustration of our argument on the current tax law rewrite project.
	We are also considering burgeoning costs to the taxpayer.

John Bercow: Will my hon. Friend give way?

Stephen O'Brien: I am in danger of never reaching the last paragraph of my speech, but I shall give way.

John Bercow: I know that my hon. Friend wants to be reminded of the integral relationship between the complexity of tax law and its implications for the introduction of each Finance Bill. Does he agree that it is therefore right to record what Lord Howe of Aberavon is too modest to note? His first Finance Bill, in 1979, in marked contrast to a measure of 488 pages that the current Chancellor introduced, was merely 28 pages long.

Stephen O'Brien: I of course defer to the remarkable body of factual knowledge, both useful and completely useless, that my hon. Friend is so often able to deploy for our elucidation. The example he gives is, I think, an example for all time, and it would be most helpful if Chancellorsespecially this Chancellorheeded it. Under Parkinson's law, 22 pages are likely to receive better scrutiny.

David Taylor: Will the hon. Gentleman give way?

Stephen O'Brien: I am happy to give way to the hon. Gentleman, who so far has spoken only from a sedentary position.

David Taylor: Does the hon. Gentleman agree that while there is sometimes a positive correlation between the size of Memberssuch as the hon. Member for Buckingham (Mr. Bercow)and their quality, the correlation between the length of Acts and their quality can be inverse?

Stephen O'Brien: I hesitate to stray too far in the direction of the analogy about size and other matters. It is important to recognise that the contributions of members of all parties here are always to be respected, because they are all honourable Members.
	This has been a helpful and, indeed, somewhat surprising debate. Like the Paymaster General, I dare say, I had not expected so much interest to be displayed. I am glad that I put in all those hours of work before a debate on what is, after all, quite a dry and technical subject. Thank goodness I did not decide to go and do something else, instead of doing at least some of the homework that was necessary for me to understand the vast array of documentation with which the Joint Committee has so ably presented us.
	As I was saying, all this comes at a costa burgeoning cost to the taxpayer. If we have any duty at all, it is to consider taxpayers' interests at all times. Despite computerisation and the increased use of companies in the administration of the tax and benefits system, it costs about 6 billion a year to run the Inland Revenue and the Benefits Agency. In 195051 it cost less than 1 billion, in 2001 prices, to run the Revenue and the equivalent of the Benefits Agency. We should look for any available way of making legislation relating to the Revenue simpler.
	I hope that part of the benefit of the tax rewrite will be the elimination of waste in connection with the running costs of a Department. I also hope that, as soon as possible, the Paymaster General will deliver a positive assessment. I should like to think that, as a result of the clarification and ease of use that will result from the rewrite project, some of the administration costs in the Inland Revenue will be reduced. As the Paymaster General is the Minister responsible for such matters, it is incumbent on me to address these remarks to her. We must always be on the lookout for opportunities to minimise waste of the public money that has been so hard earned by the taxpayer.
	Given all that I have said, and bearing in mind the warning that I gave in the latter part of my speechand provided that the Paymaster General and the Chancellor are prepared to heed that warningmy colleagues and I, as Her Majesty's loyal and official Opposition, will be more than happy to support the Bill. We congratulate all who were involved in its presentation in its current form.

David Cameron: On a point of order, Mr. Deputy Speaker. Will you give us some guidance on the correct way to state Members' interests, including those of Ministers? The Bill deals with taxation arrangements for Ministers and other Members, specifically in clauses 291 and 295. Clause 295 covers transport and subsistence arrangements for Ministers. Should we have registered our interests, given that we all have an interest in the Bill?

Mr. Deputy Speaker: The Bill does not change the law in any way. I am sure that the hon. Gentleman and, indeed, all other Members are well aware of what they must do to declare their interests during debates.

David Laws: I am delighted to be able, finally, to participate in this debate. My party welcomes the Bill, although my hon. Friend the Member for Torridge and West Devon (Mr. Burnett) may want to catch your eye later on, Mr. Deputy Speaker, to pick up on some points of detail.
	I want to begin by making some general comments, and by following the hon. Member for Eddisbury (Mr. O'Brien) in congratulating all who put in the hard and not always enjoyable work involved in getting the Bill to this stage, including the Paymaster General, the right hon. and learned Member for Rushcliffe (Mr. Clarke), members of the other place and the officials who doubtless did some of the serious grind behind the scenes to introduce greater accessibility and, to some extent, simplicity to the Bill's wording.
	We have consulted a number of tax specialists about whether the Bill is a success. Perhaps the kindest thing that I can say to the Paymaster General is that the salient comment of one tax adviser was that they take a very dim view indeed of measures such as this, which, in simplifying the tax system and making it easier for people to understand, could reduce their own fee income.

Dawn Primarolo: I am grateful for the hon. Gentleman's point about whether practitioners are happy with the rewrite. I direct him to the support papers, which include a list of all the changes that tax practitioners would like to be made to the system, every one of which would increase the complexity but none of which would pass the test of simplification.

David Laws: I take the Paymaster General's point, but I hope that she noted the somewhat barbed compliment that was being paid to the work that she, her officials and others have done in respect of this Bill.

Dawn Primarolo: indicated assent.

David Laws: In making the tax system more accessible and simpler for the ordinary man in the street, they have created a potential benefit for the economyeven if it is a disbenefit for tax accountants.
	Several detailed points have been made in the debate, one of which concerned the potential cost of measures such as this. In her closing comments, will the Paymaster General say a little more about what we have learned from the Capital Allowances Act 2001one of the first benefits of the work done by Tax Law Rewrite Committeewhether business or tax advisers have made representations about the effects of that measure, and whether it has made the system simpler or added to costs in any respect.
	Perhaps the most important point that I want to make, which was touched on by the hon. Member for East Worthing and Shoreham (Tim Loughton), was also made in a debate in another place in January of last year. It is not the same issue that many Conservative Members sought to raisewhether the Bill's detail could change the precise nature of our tax lawalbeit that that is a very important issue about which legitimate concerns have been expressed, including by my hon. Friend the Member for Torridge and West Devon; rather, I am referring to the point made by Lord Howe in a debate in January 2002 about the general desire of both Houses, and of those involved in the Bill, to make the tax system more accessible, simpler and more economic to use, not just for tax practitioners but for businesses and individuals throughout the country. There is a great danger that this attempt to make the wording of tax law simpler to understand will mask other problems with the way in which the tax system has developed in recent years, not least since 1997.
	Lord Howe said:
	My central conclusion is that there is no chance of a knock-out success against tax complexity . . . we need to identify, define and establish not an event
	such as the Bill
	but a processa comprehensive mechanism through which the problems can be addressed and managed tenaciously over the years. It is a long-haul business. The continuing insistence of the process on simplicity must be as irremovable and as constantly present as the voice of the tax-raising departments and as the politically restless, impatient input of successive Chancellors of the Exchequer.
	Lord Howe was warning us that we have much to learn. That is especially true of the Bill. Changes introduced by successive Chancellors, not least the current Chancellor, may not complicate the words that we use in tax law but they can certainly complicate the tax system itself, which is far more important.

George Osborne: The hon. Gentleman cites the sage words of Lord Howe. How would Lord Howe's comments apply to Liberal Democrat plans for local income taxes? We should then have 20, 30, 40

Mr. Deputy Speaker: Order. The hon. Member for Yeovil (Mr. Laws) must not be tempted down that route.

David Laws: It is immensely tempting, but I shall adhere to your ruling, Mr. Deputy Speaker.
	Lord Howe continued:
	We need to ensure that the neglected constituency of stability, as well as simplicity, is effectively represented at every level and every stage of the tax-making system. [Official Report, House of Lords, 23 January 2002; Vol. 630, c. 147071.]
	Without straying from the substance of the debate, will the Paymaster General describe how we can embed the simplification of new tax changes in the Finance Bill and Budget processes; and how we can move away from the general trend of tax policy, especially over the past five years, to complicate the tax system, thus making it more expensive for practitioners and businesses to use?
	Finally, I pay tribute to the Paymaster General for her work on the project. I hope that it will be the beginning of a process that ensures not only that the words in the tax system are easier to understand, but that the system itself is simpler.

John Burnett: I, too, pay tribute to Lord Howe, the right hon. and learned Member for Rushcliffe (Mr. Clarke), the Joint Committee and its officials and the Paymaster General. The rewrite project has been her Herculean labour.
	The Capital Allowances Act 2001 was a significant improvement; it was reasonably intelligent legislation in which numerous provisions were dovetailed. This Bill does the same thing. I hope that, as the right hon. Lady has assured us, successive measures will continue to be written in the same style so that they fit easily and intelligibly with the Bill. The Joint Committee's ambitions have mainly been achieved. The use of plain English, with shorter sentences and a clearer structure, is welcome.
	As I have said before, successive Finance Acts have added countless complications and numerous rates of taxes. It is asking enough of the Committee to rewrite the plethora of existing legislation and to dovetail it in specific Acts; the Government must resist the temptation gratuitously to tinker with the tax system, thereby making it more complex.
	I do not want to be too pedantic and long winded, but there have been one or two changes, and they may not be inadvertent. Clause 684 is intended to correct PAYE regulations, some of which have operated ultra vires since 1960, especially those on the coding-out practicea system of re-coding in the subsequent year underpayments made in the previous year.
	I do not mean to be churlish, but one or two parts of the Bill are unnecessarily long winded. I am grateful to the Law Society for prompting me. I cannot understand why there need to be 15 definitions of employee and why clause 66(1)(b) and 2(b) inexplicably contain two definitions of employer.
	Clauses 638 and 639 deal with exemptions for awards for bravery. Right hon. and hon. Members will recognise that individuals who have won the Victoria Cross or other decorations do not have any complexities attached to their tax affairs. It should be made clear beyond all doubt that the entire income gained from a hard-won award is free of taxation. Both clauses begin:
	No liability to income tax arises.
	I am not convinced that that wording will be fully effective. The fact that liability may not arise on those specific items of income does not seem sufficient to exclude the recipient's total income, which might affect the individual's entitlement to age allowance. I raise that point not because I think that income will be taken into account by the Inland Revenue but because, in the interests of the House and all taxpayers, it should be made absolutely clear that my understanding is correctthat payments for valour will not adversely affect any aspect of an individual's liability to tax and that he will be entirely free of taxation.
	That is a small but important point, not least given the great sacrifices made by our service men and their families, who are likely to be called upon to do the same in the near future. If we can get that clarification on record in the spirit of Pepper v. Hart people will know how the system should operate.
	The Bill is a success and perhaps the Paymaster General will remind us about the next project, which is probably in tow as we speak. I congratulate all those responsible for the measure; it is a remarkable improvement on what has gone before.

Dawn Primarolo: I begin with the point made by the hon. Member for Torridge and West Devon (Mr. Burnett) about awards for bravery. My understanding is that there has been no change, but I will check with my officials. As we have tried to demonstrate through the tax law rewrite project, we want to make the legislation clear.
	It might help if I explain how minor changes are made to legislation in the rewriting process and how the tax law rewrite project undertakes consultation. Ministers receive the tax law rewrite project only when it has been completed and moves into its parliamentary stage. I said that I would give examples of minor changes to the legislation, such as new provisions to fill gaps in the existing legislationfor instance, the incorporation of extra-statutory concessionsthe abolition of obsolete material or the correction of minor anomalies.
	The project must first exercise judgment in deciding whether a proposed change is minor enough to fall within its remit. It identifies all proposed changes in the various consultations and asks for comments. That request does not come to Ministers. If respondents all agree that the change should be made, as part of the rewrite, it is placed in the Bill and flagged up so that Parliament may consider it. If the reaction is unfavourable, the change is generally dropped and a reason for it not being included is given. For example, an extra-statutory concession might need to continue.
	In cases of doubt or mixed reaction to the consultation, guidance is sought from the Joint Committee, whose membership, of course, includes Members of both Houses; this evening, compliments have been paid to their work. Ultimately, it is for Parliament to decide whether the Bill should make those minor changes. Up to that point, however, the project is all embracing and, for Treasury Ministers, an unusual exercise in that it allows those outside the House who use the legislation to give their opinion on whether the change should be made. The hon. Member for Eddisbury (Mr. O'Brien) asked for examples of such changes and I shall provide them in a moment.
	The next issues are not directly related to the Bill, but I hope that with your tolerance, Mr. Deputy Speaker, I may refer to them in passing. The hon. Member for Yeovil (Mr. Laws) raised the vexed question of complexity and simplicity, as if we lived in a perfect world in which the tax authorities never had to consider the practice of individuals or commercial organisations in respect of tax legislation and whether it followed the intent of Parliament in passing the legislation. The problem we have is mainly with anti-avoidance legislation, which is long and complex because it responds to complex relationships. The hon. Gentleman asked me to speculate on how we might overcome that. Could we get tax planners to agree a truce, under which they would stop their creative tax planning and we would not need our anti-avoidance legislation? I live in hope, but I think not.

David Laws: The Paymaster General's comments notwithstanding, would she accept that a Chancellor can pursue a policy of tax simplification and reduce the number of taxes, as Lord Lawson did in the 1980s, or he can introduce new tax allowances and reliefs that complicate the tax systemas most people believe the present Chancellor has done since 1997?

Dawn Primarolo: With respect, the hon. Gentleman has never been in the positionand probably never will beof receiving Budget submissions, be they from the CBI, the Institute of Directors or even the Liberal Democrats and the Conservatives. Without fail, those submissions ask the Government to intervene to assist in a particular area; they can be hugely beneficial.
	For instance, the legislation on the research and development tax credit was widely celebrated and acclaimed by businesses small and large. I seem to remember that it took up some 90 pages, and that Liberal Democrat Members supported it in this House. However, when it comes to the question of simplicity and complexity, some hon. Members seem splendidly unaware that the UK economy is part of the global economy. Tax planners arrive at intriguing and interesting interpretations of tax law, and so the matter is never as straightforward as some hon. Members suggest.
	I agree, however, that the idea that the Government set out to make tax law complex is rubbish. Even so, hon. Members must turn their minds to the challenges faced by all tax authorities, not simply by the authorities in this country. The hon. Member for Yeovil may be right to say that legislation that is easy to understand may not be so easy to get around; I doubt that but, again, I live in hope.
	The hon. Member for Eddisbury (Mr. O'Brien) asked several questions about parliamentary drafters. A dedicated team of drafters is part of the tax law rewrite project, and that is taken fully into account in the resource planning for that office. That will continue. The PAYE regulations will be out in the spring, and the next tax law rewrite Bill will be available in the later part of this year or early next.
	The hon. Member for Eddisbury asked about regulatory impact assessments. I know that he is familiar with the argument that they are difficult to achieve when the tax law remains unchanged. However, the assessment for this Bill makes it clear that when the rewritten legislation has been up and running for a number of years, the Government will work in conjunction with the relevant interested parties on the long-term and short-term cost of the Bill. In that way, a more meaningful understanding of how to proceed would be arrived at.
	The hon. Member for Eddisbury asked for examples of minor changes. I draw his attention to the clause dealing with the exemption of certain lump sums from pension income, which now provides that the lump sums provided under retirement annuity contracts are exempt from income tax, as long as they are provided under the approved rules of the scheme. That change is in principle in the taxpayer's favour. Another example is the reporting requirements for the acquisition of shares. Those requirements used to be 30, 60 and 92 days, but the Bill sets them all at 92 days. That minor change introduces simplicity, and is clearly in the taxpayer's favour. The supporting material always makes clear whether a change is in the favour of the taxpayer or of the tax authorities. With only a couple of exceptions, the changes are all in favour of the taxpayer.
	There are many examples of discarding obsolete provisions, but I shall give just one. Section 648(A)(2) of the Income and Corporation Taxes Act 1988 has not been rewritten. Explanatory note 2381 makes it clear that that transitional measure is no longer needed.
	The redraft of the PAYE regulations will be out in the spring, and I hope that they will come before Parliament later this year. However, the third rewrite Bill will be published in draft in the first half of next yearnot later this year, as I suggested. I apologise for that error. It will cover income tax, property income, trading income, savings and investment income and foreign income.

David Laws: Will the next tax rewrite Bill resolve any of the problems alluded to in today's Treasury Committee report, which touches on the issue of tax avoidance by the Inland Revenue?

Dawn Primarolo: I have been in the Chamber all day, and I have not had a chance to read the report to which the hon. Gentleman refers, but I am sure that, when this business concludes, I will rush out and study it avidly.
	The hon. Member for Eddisbury also asked about flow charts. I agree that they are helpful and that they can be used, but there is a slight problem with incorporating them in legislation: it is very difficult to frame legislative amendments to flow charts. We shall be as helpful as we can, but I wonder whether that might just be a trick question.
	It is not for us to submit the Bill to the Plain English Campaign, but I am sure that those involved in the campaign will study it, although I do not think that they are necessarily noted for looking at technical legislation. I concur with the hon. Gentleman's view that the Bill is an excellent piece of drafting and that it is well understood.
	I was asked about electronic consultation. All the tax law rewrite project drafts and draft Bills are published in paper form, announced in press releases in paper form and are accessible to everyone in every way.
	Finally, I thank all the professional bodies, the Inland Revenue team, the tax law rewrite team and the Members of Parliament involved in the tax law rewrite project. I also thank all those hon. Members who have stayed in the Chamber this evening and made this debate so fascinating, if a little varied at times. I commend the Bill to the House.
	Question put and agreed to.
	Bill accordingly read the Third time, and passed.

Mid-Term Review of the Common Agricultural Policy

[Relevant Documents: European Union Documents No. 7964/00, Special Report No. 8/2000 of the Court of Auditors on the Community measures for the disposal of butterfat, No. 12457/01, Special Report No. 6/2001 of the Court of Auditors on milk quotas and No. 12782/02, Special Report No. 5/2002 of the Court of Auditors on extensification premium and payment schemes in the common organisation of the market for beef and veal. The Third Report of the Environment, Food and Rural Affairs Committee, Session 200203, on The Mid-term Review of the Common Agricultural Policy (HC 151).]

Mr. Deputy Speaker: I must tell the House that Mr. Speaker has selected the amendment in the name of the official Opposition.

Elliot Morley: I beg to move,
	That this House takes note of European Union documents No. 10879/02, Commission Communication on the Mid-Term Review of the Common Agricultural Policy, No. 10896/02, Commission working document containing a report on milk quotas and No. COM (03) 23, draft Council Regulations on the reform of the Common Agricultural Policy; supports the Government's objective, to work for a sustainable Common Agricultural Policy which contributes to prosperous rural areas, enhances the natural environment, and provides high-quality, safe food and high animal welfare standards, a fair and competitive environment for farmers and better value for money for taxpayers and consumers; welcomes the European Commission's proposals on reform of the Common Agricultural Policy, in particular the proposals to decouple payments from production, to move from production-linked subsidies to wider agri-environment and rural development measures, and for further market reform, while lessening the adverse impact on trading opportunities to less-developed countries; but regrets that the proposals in several areas did not go further, that they include a complex and potentially unfair mechanism for transferring funds towards agri-environment and rural development measures and, on dairy reform, that they do not meet the requirement of the Berlin agreement that there would be a mid-term review 'with the aim of allowing the present quota arrangements to run out after 2006'.
	The European Commission's proposals on common agricultural policy reform, published on 22 January, give us a real opportunity to set down a sustainable basis for European agriculture policy. As we said in response to the Commission's initial discussion document last July, the Government strongly support the direction of those proposals. They will enable us to lay the foundations for a sustainable and internationally acceptable CAP, which will command the support of all stakeholders in the enlarged European Union. However, we have some significant criticisms of the packageI will come to them laterbut we believe that, in general, the reforms are going in the right direction. Of course there is much work to be done before we can be sure that we have fully evaluated those proposals. Finding a fair, practical and acceptable outcome will not be easy.
	Against that background, there are three key points on which I want to focus: the importance of securing changes to the CAP that bring real benefits to all our farmers; the importance of the EU taking a strong and forward-looking stance in the World Trade Organisation negotiations; and the need to take account of the wider international context.
	We must take this opportunity to reform if we are to avoid further environmental damage, regenerate our rural areas and support our farmers in ways that allow them to plan ahead with confidence. There are real benefits to United Kingdom farmers in those proposals. In particular, decoupling support from production will be a massive advance for us, not least because it will improve the financial position of farmers. They will continue to receive much the same level of support as they do now, but they will no longer have to stick to certain production patterns to do so. As a result, they will be free to optimise, rather than being driven to maximise, their output. Of course they will have a great deal of flexibility in their businesses.
	Decoupling will have wider benefits, too. Our farming will come closer to its markets, and it will be more efficient and more environmentally sustainable, as well as being more profitable. Research commissioned by my Department and by the Commission concludes that incomes will rise as a result of decoupling. The CAP will be simpler to administer because of the major reduction in bureaucracy that will follow these proposals. Reducing the overregulation of farmers is a key outcome that we should aim for.
	Decoupling will lead to changes in farming practices. In some cases, those changes may be significant, or have significant effects on upstream or downstream activities. The implications for extensive beef production in some parts of the European Communityincluding the less favoured areasare one area of concern. We will have to explore flexibility in the regulations as a way of dealing with specific sectoral or regional problems.
	Agriculture is both the prize and the stumbling block in the WTO Doha development round. The EU should seize the initiative and put pressure on the United States and others to change their protectionist policies. A good outcome on agriculture will unlock a wide range of opportunities for developing countries. By contrast, stalemate in agriculture could put the round in jeopardy and therefore deny us the gains that we could make in agriculture and in other sectors. Delay, evasion and prevarication are not in our interests. We must acknowledge that September's WTO ministerial meeting in Cancun is a real deadline. We must prepare for it accordingly.

David Taylor: The Minister refers to the widely welcomed change in direction that will lead to decoupling of payments. However, there are risks associated with that, as I am sure the Minister would agree. One particular risk is land abandonment. How might that risk be tackled?

Elliot Morley: My hon. Friend asks a reasonable question. If there are direct payments, issues to do with stocking arise. I think that my hon. Friend is alluding to that. We can deal with such problems through our agri-environmental approach. On some issues, such as upland management, the agri-environmental approach can be a more appropriate management tool than production support, which can distort markets and cause all sorts of problems. I assure my hon. Friend that we will take his concerns into account.

Andrew George: Will the Minister give way?

Elliot Morley: Briefly. I want to keep my contribution brief because this is a brief debate.

Andrew George: I appreciate the Minister's willingness to give way. Following the previous intervention, I wonder whether the Government have made any assessment of the impact, on tenant farmers, rents and land values, of decoupling and direct payments to the farm simply for being a farm. Is the Minister concerned that there could be a hike in rents and land values that would put many tenant farmers in difficulty?

Elliot Morley: Some of the effects of decoupling are unknown. It does not necessarily follow that there will be a sharp hike in rents. There are changes in the proposals that would benefit tenant farmers. I am sure that we will touch on them in the debate. We will have to think carefully about certain issues and I accept that the proposals contain some unanswered questions. We will continue to debate such points among ourselves and in consultation with farming representatives.
	We must not overlook the wider international dimension of CAP reform. Seen from the point of view of developing countries, our policiesand those of the US and other developed countriesdeny them the opportunity to exploit their natural competitive advantages and trade their way out of poverty. CAP reform has to be part of the EU's efforts to help the poorer countries of the world to improve their lot. For all those reasons, the Government broadly welcome the proposals. However, we have a number of significant concerns that need to be addressed. I will run through them.

Gillian Shephard: Will the Minister give way?

Elliot Morley: I will, but I will make this the last intervention.

Gillian Shephard: The Minister knows the concerns of sugar beet farmers. He is talking about careful negotiations at the WTO. What words of comfort has he for sugar beet farmerson alternative uses of sugar beet, for example? Sugar beet production may be phased out in this country.

Elliot Morley: As the hon. Lady knows, changes will inevitably occur in the sugar regime. The agreement on the sugar regime means that it will run until 2006. However, we cannot ignore the implications of decoupling for the sugar regime. I agree that there is an important role for sugar in industrial crops, such as ethanol fuels and in other forms of industrial production. I know that research programmes at the Central Science Laboratory have been examining the whole issue of industrial crops, and I agree that we need to consider how we can broaden the opportunities for farmers and, in particular, for those who are involved in the sugar sector. I take that point seriously.
	Although we support the general proposition that there needs to be a switch from the first to the second pillar of the CAPfrom production-based support to agri-environment and rural development measureswe feel that the proposals should go further in that direction than the EU is proposing. I also support the view that the existing system needs to be considerably simplified. The proposals being made are very complex.
	We also have problems with the specific approach proposed by the Commission. It appears to put the burden of reductions very heavily on a minority of member states, including the United Kingdom and Germany. That cannot be right in relation to how the reforms should be put in place. Their impact should be much more fairly distributed. Moreover, some of the proposals would put the burden of change on some of the more efficient farmers that have a viable long-term future. We run the risk of turning the clock back and driving farms to split up into less competitive units.
	At the January meeting of the Agriculture and Fisheries Council, my right hon. Friend the Secretary of State argued that we needed a simple system that applied the same rate or reduction to everyone. It must be fair and easily understood by farmers, and easy for our administrative systems to cope with. He also explained our serious problems with the Commission's proposed distribution key for the reallocation of rural development money between the member states as a result of the proposed modulation. This takes no account of the fact that the existing budget is not distributed on anything like a reasonable or equitable basis. The Commission proposals do nothing to correct this. We shall certainly want to press that point very hard.
	It is ridiculous that a member state with an agricultural and rural sector as large as that in the United Kingdom receives only 3.5 per cent. of the current rural development budget. The Commission proposals would make the situation even worse. That is clearly not acceptable to us. The distribution of money raised through modulation must, at least, start to redress historic funding inequalities in the allocation of pillar 2 resources
	We are also disappointed that the Commission proposals do not start modulation until 2006. If there really are barriers to an earlier start to the new system, I believe that more needs to be done to encourage member states to take better advantage of the existing voluntary system and to provide more flexibility within the system. One way or another, the rates of modulation need to be pitched so that they allow continued implementation of the rural development programme that we are developing in the application of modulation and into which we are putting more money.

Andrew George: I thank the Minister for giving way. It is important that interventions are taken as they help to make the Government accountable.
	I agree with the Minister entirely in his criticisms about how the proposals for modulation have been drawn up, so what alliances will the UK Government seek to form with other member states to drive through the kind of reforms that he and I would like to take place?

Elliot Morley: The hon. Gentleman makes a fair point. To get change, we need to seek the agreement of other member states. Other than ourselves, I think that Germany is the only other country that is currently using the voluntary procedures. France tried that, but its scheme ran into all sorts of problems. They applied 20 per cent. maximum modulation to some farms and it appears that the French did not have the schemes to spend the money on. It was not the most brilliant of programmes.
	Germany certainly supports our views. Other countries also support our views on how the proposals should be changed. Many Scandinavian countries strongly believe that there should be a shift from production support to rural development support. Hon. Members will probably be aware that part of the Commission proposal is that not all the proceeds of modulation will go to rural development. Some of the proceeds will go into paying for restructuring of other aspects of the CAP. One can see some logic in that, but it is a pity that the way in which the modulation is constructed and pitched will reduce the amount of funds available for rural developments, which we think is where the money should be switched. Clearly, there will be considerable discussion on how that is applied and about the details.
	Finally, in terms of our concerns, we find some of the proposals related to the reform of the dairy regime very disappointing. While I strongly support the Commission's approach in relation to extending and rebalancing the price cuts in this sector, I have serious concerns about the suggestion that the dairy quota regime should be extended for a further seven years. The Commission has proposed changes that go some way down the road we shall need to travel if we are to remove quotas entirely and to improve our competitive position in world markets. The United Kingdom's views are well known. We would welcome an orderly phasing out of milk quotas, and it seems that member states and the Commission are moving to a position in which they accept that milk quotas will end. If so, the sooner we do that, the better it will be, rather than extending it in this way.

David Burnside: As the Minister comes to the end of his concerns, will he comment on a major concern in Northern Ireland, where our farms are smaller than those in England, Scotland and Wales, with the 32,000 farms averaging out at about 60 acres? The biggest impact of the reduction of 340 million between 2006 and 2012 will fall on the small farm sector, and that is a major concern of the Ulster Farmers Union.

Elliot Morley: I understand that. The hon. Gentleman is probably aware that the Commission's proposal includes a threshold limit in which there will be no modulation, so there will be some protection in its proposals for the smaller farms. There are arguments for and against. We have applied modulation in this country across the board. We had some debate about that when we were originally discussing how modulation should be applied. There were proposals in our own country that there should be a similar approach of a threshold in relation to smaller units. However, when one looks at the detail one sees that there are all sorts of problems. There is the risk of encouraging people to divide farms into small units to get on to the threshold.
	We felt that the standard, across-the-board modulation, which is simple, easy to understand and easy to apply, was the best approach. We believe that the Commission should take this approach as well. As it happens, this system, given the structure of Northern Ireland farms, which I know very well, offers them some protection.

Michael Weir: There are similar concerns in Scotland. Is the Minister convinced that the level, which I think is Euro5,000, is too low to affect smaller farms? There is also serious concern in Scotland that the medium-sized farms in constituencies such as mine, rather than the larger and very small farms, will be hard hit by modulation, because they will lose a considerable part of their income. Does the hon. Gentleman have anything to say on that?

Elliot Morley: I think that the Euro5,000 issue is a matter for debate. At this stage in the proposals, obviously all the details are debatable in the negotiations. We shall listen to views that we receive about the threshold levels.
	With regard to medium-sized farms, if there is a percentage modulation the larger units and those receiving the most in subsidies are the ones contributing most in modulation. So there is an element of fairness in the way in which it is applied, in that it recognises the level of subsidy that individual units receive.

Angela Browning: The Minister said that he is opposed to the extension of the milk quota to 2014. I hope that he will understand that for those farmers who have quota, which include those who are still actively engaged in dairy farming and some who own quota for which they paid but who lease it out as part of their income, there is a need, as with any other business, to be able to plan for the medium and long term. I hope that the hon. Gentleman will qualify his remarks by saying, if he is opposed to 2014, what he thinks is the optimum time. Farmers, particularly in the dairy sector, are very concerned, and deserve clarification. If I catch your eye, Mr. Deputy Speaker, I may say more about that.

Elliot Morley: The Government have made it clear many times that quota should be phased out. That can come as no surprise to the dairy sector. The hon. Lady will know that there are mixed opinions in that sector, but many people think that quotas have stultified its development by acting as a brake on innovation and expansion, and they would welcome their demise. I accept that people have invested in milk quota and we would not expect to see them end overnight. I agree that a reasonable date should be set which we can work towards to phase out quota. Although we think that the proposed dates are too far away, there are also proposals gradually to increase the amount of quota for each member state. That will liberalise the regime to an extent. We think that 2006 would be a more realistic date for the phase out of milk quotas.

Roger Williams: With a reduction in the intervention price for dairy products, the value of quota could reduce to almost zero. The National Farmers Union anticipates a fall of more than 30 per cent. in milk prices. With farmers finding it difficult to produce milk that covers their costs, will any dairy farmers be left in Britain?

Elliot Morley: I believe that there will be because the dairy sector can adjust to the changes. Of course there are structural problems in the sector. My noble Friend Lord Whitty recently chaired the meetings of the food chain initiative. It has addressed some of the sector's problems, such as its seasonality and the slump in prices because of that. It has also considered ways to even out production and the low value products that milk goes into.
	The issues can be addressed. I accept what the hon. Gentleman says about the value of milk quota. It is likely to fall. There is the added complication of the recent European Court ruling on non-producing holders of milk quota. They will have to divest themselves of it, which means that a lot of quota will come on to the market, and that is bound to influence prices. Having said that, there are complicated proposals in the mid-term review on calculating entitlement in terms of what quota someone may hold in future. That is unsatisfactory because it encourages people to accumulate quota on the basis that that might influence the support payments on the quota that they hold. In turn, that might remove quota from the market, especially in terms of lease availability. So there are all sorts of complications in relation to quota. That illustrates why we would be better off by moving away from them. We find it impossible to understand the logic that has driven the Commission to propose a further two years of price cuts on milk and an extra seven years of quotas. That is not appealing.
	Those are the main criticisms, but we must not lose sight of the positive elements of the Commission's proposals, in particular the benefits of decoupling. That is an important gain and certainly one worth having. I also accept that much technical work has to be done on the proposals before the Council is in a position to assess the details of what they mean to our farmers. However, the reforms are crucial to our ability to deliver viable and sustainable farming in Europe and to withstand increasing competition from the rest of the world. That is why we need to get on with the negotiations, to reach an agreement and to address the details of the proposals. We will robustly make the case for UK farmers when the proposals are clearly against our national interest and we will argue for changes to be made. We will also look closely at how some of them are meant to work, including the problems inherent in the details and the possible bureaucracy that they might create. We will, of course, listen to the agricultural sector and other stakeholders, and will listen closely to hon. Members who wish to comment on such issues, especially in relation to their constituents. The CAP reforms are long overdue, but they are going in the right direction, as they put farming on a much more sustainable footing.

John Hayes: I beg to move, To leave out from Policy in line 5 to the end of the Question, and to add instead thereof:
	recognises the need for a substantial recovery in farm incomes from the present low base to a level at which UK farmers are earning sustainable and competitive returns; supports the objective of achieving prosperous rural areas, an enhanced natural environment and provision of high-quality, safe food and high animal welfare standards; welcomes the European Commission's appreciation of the need to reform the Common Agricultural Policy, which absorbs half the EU budget, and recalls Government failures in this regard; further welcomes the proposals to decouple payments from production, and for further market reform; but has deep reservations about the effects of the current proposals on UK agriculture and recognises that the British people are increasingly hostile to a system that penalises both UK taxpayers and farmers; believes that dairy regime reform should provide greater opportunity for the UK dairy sector to add value to their product through producer-based processing; notes that the Commission proposals involve a potentially unfair mechanism for transferring funds towards agri-environmental and rural development measures; and urges the Government to use all the means at its disposal to ensure that these proposals are redrafted in the interests of UK farmers and consumers.
	Calls for common agricultural policy reform have been the habit of politicians in the United Kingdom and across Europe as long as the common agricultural policy has existed. Crises, watersheds and turning points have come and gone, so the House will understand my scepticism about the likelihood or even possibility of reforming the CAP in our nation's farming interests. Similar scepticism among farmers is not just the product of realism about Machiavellian Euro politics, but is spurred by the demoralisation of British agriculture in recent years. Although it is understandable for reasons of political expediency, it is wholly unacceptable that the Government failed to mention in their motion the desperate state of UK farming. Our amendment properly sets that out, thus putting the debate in its proper context.
	As the whole House knows, British agriculture is in crisis by any measure. Farm incomes are about a third below their 1995 level, a fall greater than that in any other European country. In 200102, input costs rose by 1.8 per cent. in Britain, whereas they have fallen in Europe as a whole. The number of people leaving the industry continues to grow, bank borrowing is still increasing, and in most sectors farm-gate prices are insufficient to give farmers a real chance of earning a decent living. British agriculture is in a desperate state, but things are different for our so-called partners in continental Europethe kind of partners who are ever ready to take commercial advantage of catastrophes such as BSE or foot and mouth, and conspire to frustrate the Government's half-hearted efforts to protect our national interests. Conservatives recognise that there can be no viable British countryside without viable British agriculture.
	It is unclear whether the Government share our view, but it is certain that most Europeans are not faintly interested in the survival of British farming. It is clear, however, that the CAP has encouraged highly intensive production-driven agriculture, as the Minister acknowledged in his opening remarks. Over-production, for example in the beef and dairy sectors, and price distortions have led to a perverse agricultural marketplace.

Roy Beggs: Does the hon. Gentleman acknowledge that to operate a viable farm business such as an intensive farm business in Northern Ireland and other parts of the United Kingdom, many small farmers have land on conacre year on year? It is not clear where the benefit of the new change will be felt. Will farmers benefit from the land that they own or rent on conacre, or will the benefit go to their landlord?

John Hayes: There are genuine issues about whether the payments will go to the owner of the land or the farmer, and the hon. Gentleman is right to raise them. The hon. Member for St. Ives (Andrew George) made a good, fair point about tenant farmers, which the Government need to address. We expect purposeful and robust answers from the Minister to clarify the sensible point made by the hon. Member for East Antrim (Mr. Beggs).

Elliot Morley: It may help the House if I answer straight away. Under the proposals, the payments go to the farmer, whether he is a tenant or landowner. If he is a tenant, he has the right to payment if he moves to new land, which gives him some protection.

John Hayes: That is, of course, right, but there are often difficulties in the relationship between owner and farmer, and they need to be ironed out. If payments go to the farmer, they can be moved around as the Minister suggests, but we need clarity about the different responsibilities and opportunities that exist for owners and farmers of land. I think that that is the point that the hon. Member for East Antrim was making, and it is a good and solid point.

Several hon. Members: rose

John Hayes: I must now make some progress, but I shall give way again later if I have time to do so.
	Farmers, often against their instincts, have pursued a regime that has resulted in a distorted market with an increased propensity for disasters, all at enormous cost to the British taxpayer. No one can blame farmers for dancing to a tune composed by others, nor honestly claim that the process has been led by consumer demand. Through its payment structure, the CAP has stimulated larger farms in the UK. I am mindful of the large, efficient arable farms in the east of England, many of which are situated in my constituency. They are good businesses run by good people, so it is a bitter irony that the Commission's modulation proposals will penalise large, efficient farmsin other words, British agriculture, in which farm size is larger than the European average.

Roger Williams: Last night, the National Farmers Union told us that the proposals abolished the Euro300,000 ceiling, yet the Minister said that there was some disincentive in respect of the efficient holdings that the hon. Gentleman is talking about.

John Hayes: I can clarify that issue for the hon. Gentleman. That ceiling or cap existed in the proposals issued in July 2002. It was dropped in the proposals published at the beginning of this year, as I am sure the Minister will confirm by nodding, but he is right that there is concern that some member states want to reintroduce the ceiling. There is enthusiasm among some continental Europeans for reintroducing the cap, which would do even more damage to large farms, as he suggests.
	It is clear that British farmers who happen to be large farmers will lose almost 20 per cent. of their income as a result of the direct payments. Worse still, it is true that some people want to reintroduce the cap to which the hon. Member for Brecon and Radnorshire (Mr. Williams) referred. In general, there is a strong case for allocating single payments to the farmer. As the hon. Member for East Antrim suggested, the complex issue of transfer of entitlements will need to be resolved where landlords and tenants are involved. As I said, it is important for the Government to develop a scheme that fairly reflects the legitimate interests of the relevant parties.

Roy Beggs: Will the hon. Gentleman allow me to intervene again?

John Hayes: Yes, but I want to make progress as this is a short debate. If I may, I shall ask the hon. Gentleman to keep his remarks fairly short. I shall then try to deal with them.

Roy Beggs: I thank the hon. Gentleman for giving way again. We have an entirely different system in Northern Ireland. Tenant farmers have been mentioned and the situation is relatively clear in that respect. However, most farmers in Northern Ireland own freeholds and rent land from other farmers who are not active. That is where clear guidance has to be given.

John Hayes: I would never attempt to second-guess the hon. Gentleman's legendary expertise in all matters Northern Irish, but I heard what he said, as I am sure the Minister did. Clearly, those issues will need to be taken into account when such matters are dealt with in further European negotiations.
	The current reform of the CAP is motivated not by a desire to address the sort of problems that have already been mentioned in this debate, but by the realisation that maintenance of the CAP in its current form is incompatible with enlargement. For that reason, in addition to modulation, we face decouplinga cocktail that, in its proposed form, is likely to be highly disadvantageous to British farming.
	There is a good argument for recognising the special role that farmers play as custodians of the countryside through agri-environmental payments, but such payments must be equitable, enforceable and cost-neutral. To ensure that they are equitable, a baseline must be established that recognises past good practice and ensures that British farming is not measured merely by the unrepresentative post-BSE and foot-and-mouth years.

Richard Bacon: My hon. Friend mentioned baselines. Foot and mouth and BSE are two diseases, but my constituents suffered very heavily as a result of classical swine fever. Is it not wrong that farmers who suffer as a result of such diseases and therefore have very atypical years should be penalised because those years are treated as a baseline?

John Hayes: My hon. Friend is absolutely right. I am familiar with the problems of that kind that have been suffered by pig farmers in Norfolk. The payment will be calculated on the basis of the physical facts of successful claims made over three years: 2000, 2001 and 2002. One or more of those years can be dropped if it is felt to be unrepresentative or exceptional, but the point is that all those years were exceptionally bad for British farming. The baseline that will be constructed will therefore be implicitly unfair to British agriculture, and my hon. Friend is right to highlight that point.
	Measuring the environmental impact and the social and cultural importance of farming requires a balance sheet for agriculture. I recommend to the House and to the nation Lincolnshire's Charter for Agriculture and Horticulture, which provides an excellent model.

Jonathan Sayeed: A fine document.

John Hayes: My hon. Friend has obviously read it. It suggests such a calculation of the true value of food farming and horticulture, leading to an annual statement. To be respected, and therefore enforceable, any system must be founded on such a degree of empiricism. The criteria against which payments are made should be fairly scrutinised and cost-neutral to the industry. Farmers have faced a bureaucratic burden that has increased overheads at a time when incomes are falling. But if the integrated admission and control schemeIACSis complicated, imagine what a multi-faceted, multi-tiered environmentally friendly payment system might mean in terms of paperwork. Simplicity is crucial. A straightforward system of single payments based on a clearly defined, understandable set of criteria is the best means of re-establishing a demoralised industry's faith in the new regime.
	Farming's problems are typified by the plight of the dairy sector. It is almost impossible to make money producing raw milk when farm-gate prices barely exceed the cost of production. The only way in which a viable future for the British dairy industry can be established is by creating a climate in which farmers can add value to their base product. This means collaborative, producer-based processing. The Ministerthe whole Housewill know that Britain is unusual in terms of the concentration of processing capacity outside the industry. That means that the dairy sector is particularly vulnerable to price pressures, and this must be addressed in the reform of the regime.
	Dairy farmers also need action on bovine tuberculosis. The National Farmers Union said:
	The disease is completely out of control and the government have no policy.
	In 2002, 16,066 new cases were confirmed, and if we wait until the end of the trials, the whole of the west country will be a hot spot. It is well established that badgers are oneI say only oneof the various causes of the spread of TB, yet the badgers culled so far have been killed to no effect. What vaccination measures are the Government considering? How quickly can reliable tests using the latest science be put in place? How bad will the crisis be allowed to getwith farmers suffering the horror of TB outbreaks and ever more taxpayers' money being spentbefore the Government consider a limited cull of badgers outside the trial areas, when there is clear evidence of the infection being passed between species?

Bill Wiggin: The Minister will be aware of how concerned I have been about the crisis facing cattle owners in the United Kingdom. There are several problems with the current situation. The Krebs trials, as they are known, will probably not produce a conclusive result. The huge amount spent on research into tuberculosis is spent mainly on human tuberculosis. Does my hon. Friend agree that the real problem is that a commercially viable vaccine might not be found? If one is found, the Government must insist that it is produced, or in some way make it economically viable to produce. I hope that my hon. Friend will continue to pay a great deal of attention to this crisis, which is having a big impact on dairy and beef producers across the United Kingdom.

John Hayes: I am tempted to say that that is why I included the issue in my speech. My hon. Friend is absolutely right to say that there is a profound problem. He is also right about vaccinations, which is why I challenged the Minister on that matter. I know that the Select Committee will look at the question in some detail. My hon. Friend is a notablesome would say inspirationalmember of that Committee, and he will bring the diligence that he has already shown in defending his farmers over this issue to the tasks that lie ahead. [Interruption.] I was pausing for breath as I thought about those dreadful problems.
	Other important questions deserve equally clear answers. It is proposed to reduce the single payment between 2006 and 2012. As the Under-Secretary knows, the UK is one of the few member states that operate a voluntary modulation scheme to fund rural development. Does he agree that, to be fair to UK farmers, the current rates must not increase unless and until there is a parity of rates in a compulsory modulation scheme throughout the EU?
	It is proposed to use a proportion of the amount arising from payment cuts to make budget savings that are destined for future market needs. Will the Under-Secretary guarantee that any such digression must be at the flat rate, with no de minimis exemption for small farms in the EU? Farmers rightly highlight their anxiety that the UK will suffer most from modulation and digression proposals because it has relatively large farms.
	It is proposed to establish compulsory, permanent set-aside. Does the Under-Secretary realise that that is incoherent and unnecessary, and should be fought? Again, farmers have stated their opposition to the proposal and to the proposed ban on growing energy crops on set-aside land. The Chirac-Schrder agreement on CAP finance in October means that little money will be left for rural development. How will the farm advisory service and related measures be funded?
	The British people have had enough of the wasteful, bureaucratic, inequitable common agricultural policy. Despite their rhetoric, the Government have not even taken up CAP reform where the Conservatives left off. The Under-Secretary looks sceptical, but I remind him that when in government, our Ministers produced The Case for Radical Reform of the CAP. It received little support from the then Opposition, of whose agriculture team the Under-Secretary, for whom I have a great deal of respect, was a prominent member. The Conservatives were determined to grasp the nettle, but the current Administration do not share that determination.
	The motion simply expresses the Under-Secretary's regrets. He talked about taking robust action to defend the British position and highlighting some of the issues that hon. Members raised. However, the motion contains no call to action or fighting talk. Regrets come cheap and hon. Members will share my doubts about how hard he will fight and where he will draw the line on behalf of our farmers.
	The tortuous negotiations that surround the reform are emblematic of Euro-politics. They are never straightforward, always esoteric and seldom in Britain's interests. Britons see their farmers facing ruin while they subsidise tobacco growers, non-existent olive farmers and bloated Brussels bureaucrats. The British people pay more than 1.5 billion a year for the privilege of being part of that club.

Desmond Swayne: Daylight robbery.

John Hayes: I would not put it in such lurid terms because I always speak with moderation. However, the British people's total contribution in 2000 was 1.8 billion and half the EU's budget goes on the CAP. In Blair's Britain, we all face the awful prospect of being robbed, but choosing to be robbed is extraordinary. Those whose nights are plagued by the European dream justify it on the basis that there is no alternative, and that some mythical, predetermined course of history makes closer and more expensive involvement in a failed collective policy for European agriculture inevitable. We are also told that our national freedom is irretrievable and that we have travelled too far down the road to national oblivion to turn back.
	I do not share that defeatist mentality, and neither do most Britons. I was about to say that I did not share that Vichy mentality, but I did not want to make faint hearts flutter. The CAP must be radically reformed or die. This is the last chance for reform. Surely the Minister will not return to the House with a half-hearted package that will disappoint both Members and our farming industry, and tell us that further reform is on the cards. We have heard that so often before.
	I am proud of British food and British farming. Agriculture anchors rural communities to the land. The availability of agricultural employment gives opportunities to young people and manual workers who would otherwise be excluded from the rural economy and from the countryside itself. But, even more than that, agriculture is at the heart of our consciousness and culture. It assures the continuity of our agrarian history and binds man to nature.
	British farmers deserve better than these proposals, and Britain's countryside deserves a fair deal. The Government must fight for a decent future for British farmingor step aside and allow those of us who will fight to take on the people and policies that threaten rural Britain.
	Viable British agriculture, policies that are accountable to the British people, and a living, working countrysidethose are our goals; that is our mission. Conservatives will never be deterred from battling for British farming.

Anthony D Wright: As many Members will know, Great Yarmouth is one of the UK's major tourist resorts, but a large proportion is rural and there are many arable farmers. Over the past few years, one of my constituents, Richard Hirst, has raised several issues with me, one being the mid-term review of the common agricultural policy.
	Mr. Hirst tells me that, while he does not disagree with the principle of decoupling payments from production, the current proposals will have a severe effect on farmers like him who have not used their entire farms to grow eligible crops but have engaged in a sensible rotation including cereals, sugar beet, potatoes, vining peas and other vegetable crops. Over the past three years about 35 per cent. of the cropping area of his farm has been eligible for area aid payments, and about 6 per cent. for set-aside payments.
	The new proposals suggest a single paymentto which Mr. Hirst does not objectbased on the average claim for area aid between 2000 and 2002.That means that he will receive a much smaller payment than neighbours who have made much higher claims in the past. He will also have to set aside 10 per cent. of the cropped area to qualify for the payment, with no restrictions on the cropping that he can undertake. That means that a neighbour could receive a much higher payment, and then start introducing other crops and offer his produce for sale for a lower price than Mr. Hirst can offer, in the knowledge that he is receiving a greater subsidy per hectare than Mr. Hirst can receive. Mr. Hirst will also have to set aside more land than he sets aside now, which will also reduce his income significantly.
	At present, Mr. Hirst is trying to do all the things that DEFRA suggests. He is growing crops for specific markets, mostly with contracts with processors or as near to the end user as he can get. He has land in countryside stewardship, and is about to undertake a study with Birds Eye to look at the possibility of producing crops in a sustainable manner. Because he is doing all that, he will be severely penalisedto such an extent that he suggests it might be better for him to give up farming altogether.
	Mr. Hirst has put to me two options that he believes may mitigate some of the proposals. If the Minister cannot deal with them now, perhaps he will write to me. The first suggestion is that payments should be based on all eligible land, not just that claimed for arable area payments in the previous two years. The set-aside levels would again be based on those of the previous two years. The second is that, if the proposals are not changed, there should be a restriction on cropping preventing farms from undercutting those who grow alternative crops.
	I would appreciate a reply from the Minister. I am sure that farmers in my constituency appreciate the work that he is trying to do for farmers, not just in my constituency but in the UK as a whole.

Andrew George: I appreciate the Government responding to the European Scrutiny Committee by enabling this important debate on the future of agriculture in Britain, so that the House can give the Government a mandate to bat hard in Europe on behalf of our agriculture. It is clear that the proposals for the mid-term review, although welcome to some extent, do not go far enough. In many people's eyes they constitute a timid fudge, compared with what we should be seeking to secure. It is also clear that the Government need to form alliances in the manner that certain other countries have publicly sought to do, in order to secure the better outcome for British farmers that the hon. Member for Great Yarmouth (Mr. Wright) spoke of a moment ago when discussing one of his constituents.
	Although the documents before us are somewhat technical and complicated, and use language that will seem opaque to those who are not linked to the farming industry, they relate to the heart of the British people's relationship with the land, and to their psyche. To some extent, there still exists in the rural community a whimsical romanticism and a sense of utopia: a sense of man in close relationship with, and being challenged by, nature; a sense of the connection between man and his environment. [Interruption.] I mean man in the general sensemankind. Indeed, this issue is fundamental to the way in which we look at agriculture in this country; it is at the heart of our identity.
	It is important to reflect on the fact that, as any agricultural economist knows, it is inevitable that farms get larger over time. Over the past two centuries, concerns have been raised and protests made about the drift towards ever-larger farms. Of course, as people spend less of their disposable income on food, it is inevitable that farmers need to make more money from their holdings if they are to retain the same living standards as the rest of the population. The inescapable result is that farms become ever larger, which is why it is important that the Government intervene. If we are to retain a connection between rural society, the countryside and the primary industry that occupies most of that landscape, and if we are to prevent the countryside from being turned into prairie and ranch, in my view and the view of many who represent rural constituencies it is important that appropriate interventions be made to ensure that small family farms have a future.
	Despite what the Minister may say about the need to reflect and protect the interests of larger farms, and about the impact of these proposals on such farms, the fact is that in a year when 15,000 farmers went out of businessthe largest number who have done so since the second world warthere is serious concern that that process is likely to accelerate over time under the current agricultural structure. Indeed, certain aspects of these proposals are liable further to accelerate that process, which is why many people are concerned about them.
	There is cross-party consensus that the proposals on decoupling are welcome: to break away from production payments and to move towards single payments is essential. Will the Minister tell us how long taxpayers can be expected to tolerate payments to farmers for, in effect, doing nothing? I realise that there are cross-compliance issues, but farmers will be paid merely for being farmers. The European Scrutiny Committee felt that the point should be covered in the debate.
	The Government must have made an assessment of how long the current arrangement is likely to last, so it would be useful to know their view. UK society is largely urban, so the majority of taxpayers are town dwellers. They will find it less and less credible to pay farmers merely to be farmers. The Government should link management contracts to those payments so that they can be used to deliver the public, animal welfare, environmental and other outcomes that, for example, the Government seek to achieve through the creation of environmentally sensitive areas and other types of scheme. The public would then see genuine benefits from payments to farmers.
	The Minister drew attention to the significant unfairness in the system of modulated payments. It is fundamentally wrong that such payments should go to Brussels and be distributed through Brussels rather than a UK authority. I know that my colleague in the Scottish Executive, the Minister for Environment and Rural Development, has joined the Secretary of State for Environment, Food and Rural Affairs in making strong representations to other European leaders and to the Commission. The arrangement is wrong. British farmers make significant payments to the central European fund but receive back only a fraction of them in the form of rural development and agri-environment scheme funds. British agriculture quite rightly protests that it does not operate on a level playing field in relation to the rest of the EU.

John Hayes: The hon. Gentleman makes an important point. There will be inequities not only within countries but between them. Europe could absorb money from our farmers and our industry and then reallocate it to other countries. The money will be lost not only to farming but to the nation. The hon. Gentleman's point is worth amplifying.

Andrew George: I am grateful to the hon. Gentleman for his support. I urge the Minister to tell his European counterparts that we require national modulation schemes whereby funds are disbursed in the country in which they are raised. Instead of taking a uniform approach on the exemptionsthe floors and ceilingsthat apply, it would be far better to have variations that reflect the structure of farm-holding in each EU state. We need genuinely to devolve some of those decisions, especially on the management of the system. I urge the Minister to pursue that point in his negotiations.

Angela Browning: I do not disagree with the hon. Gentleman about looking at the differences, but as a Liberal Democrat spokesman will he please understand that a single marketfor which his party is constantly pressingmeans uniformity? That makes it so much harder to achieve any distinction between different markets, methods of farming and sizes of farms in EU countries.

Andrew George: I am grateful for the hon. Lady's intervention but her party took us into the single market and encouraged us to take the line of bland uniformity that Liberal Democrats do not accept. As with fishing and many other policy areas, of course we need to agree fundamental reforms at the centre, but Liberal Democrats would like to see devolution of the responsibility for the delivery of those policies. This may come as news to the hon. Lady, but our policy has remained consistent. We cannot take a uniform approach to agriculture, fishing and other industries across the whole of Europe and say that it must apply however difficult the circumstances. We must have a policy that reflects agreement on fundamental principles, then applies them appropriately in a devolved way in each nation state.
	As to the dairy regime, if the Government favourof the four options available in the mid-term reviewa rapid phasing out of quotas by 2006, in the Commission's own estimate that would result in the price of raw milk at the farm gate falling by 38.5 per cent. on the basis of the 2001 benchmark. Dairy farms in this country are considerably larger and much more efficient than in many other countries, but they are barely able to make a living from current milk prices. It is important that the Minister addresses the likely impact of a further 38.5 per cent. price reduction. It could bring a ranching of the UK dairy sector, with much larger units divorced from farming and the local community in a way that has not been seen before. Having broken up Milk Marque, which we argued was inappropriate, perhaps the Government need to grab the bull by the horns and address farm gate prices. It is clear that dairy farmers do not receive a fair income that meets their production costs.

David Heath: That is a desperately important point for dairy farmers, in terms of the asset value of quota and the revenue stream from milk prices, which are still far too low. Does my hon. Friend agree that one problem is the oligopoly in the supermarket sector, which will get worse if Safeway is taken over by one of the other big players? Does he agree that Safeway's acquisition needs to be put to the Competition Commission straight away?

Andrew George: I entirely agree. There is no point pussyfooting around. It is essential that the Government seek to intervene, make their view clear and ensure that the matter is referred to the Competition Competition. Whichever of the interested parties goes forward with the purchase of Safeway, that acquisition is likely to have a detrimental effect on farmers and farm-gate prices.
	My concern is that the Government are lurching forward piecemeal, with no real vision or passion for farming. They are timid and uncertain in negotiation and insufficiently bold and brave to make clear beforehand how they will deliver a clear vision for the future of agriculture in this country. It is not that I believe that the Secretary of State or the Minister lack commitment or do not have a passion for farming, but the real Secretary of State for agriculture is the person appointed to the post of rural tsar by the Prime MinisterLord Haskins. The Minister and the Secretary of State are merely the managers of the Department and the real vision comes from Lord Haskins, who was recently dubbed the villain of the countryside by Country Life magazine, perhaps appropriately.
	We have serious concerns about the proposals in the mid-term review. It is an inadequate and timid fudge. UK farmers have lost out and will do so further unless we have an even playing field, especially in relation to modulation. We are concerned about the fundamental divorce of agriculture from the rural community if we let reforms go ahead that would result in the prairie and the ranch. Many of us fear the ranching of the British countryside.
	We have not been given enough time to debate these important changes, which are fundamental to the future of our rural communities. Matters need to be resolved by June, and I urge the Government to give us more time to debate the issues before the Council of Ministers meets to resolve them.

Angela Browning: I wish to add my voice to the others tonight that have urged the Minister to set out a clear path for the future of UK agriculture. It is not clear what the Department's view is when it enters negotiations on the CAP reforms. The Minister touched briefly on some aspects of agriculture, especially the dairy sector, to which I shall return, but farms are businesses and they have been through a horrendous time, what with BSE, foot and mouth and other animal diseases.
	I am concerned about planning for the future and how we can sustain the family farm. We need to address the shape of agriculture in the future. Ranching is a concern, but east and mid-Devon do not have much arable farming, because the good grass that we grow is well suited to livestock farming. I would hate to think that the countryside of Devon would be overtaken by conifers or some such commodity. As much as possible, we should provide the food that we eat ourselves, and that must include meat as well as grain.
	The Department's latest figures show that farm incomes have risen by 14 per cent. in real terms in 2001, although that is still 62 per cent. below the 1995 figures. Worryingly, that increase depends on 140 million of net production subsidy, with only an extra 20 million coming from the marketplace. Whatever package of reform the Government produce, I hope that they will bear in mind the fact that although the dairy sector provides 95 per cent. of our own liquid milk production, it loses out time and again in the production of value-added dairy products because we suck in masses of imports.

Elliot Morley: The hon. Lady has correctly identified one of the problems with milk, and I do not disagree with her. On prices and incomes, she is right that incomes rose by nearly 15 per cent. last year. That was the second successive year in which farm incomes rose. I do not want to be complacent about the problems facing the farming sector, but the hon. Lady and the hon. Member for South Holland and The Deepings (Mr. Hayes) both used 1995 as the baseline year. That year was very unusual, in that price cuts in arable aid meant that compensation was paid for price falls that did not take place. That element of double subsidy in 1995 means that it is a very artificial base year to use as a comparison for price falls.

Angela Browning: I am quoting figures provided to south-west MPs by the south-west branch of the National Farmers Union. The information provided is excellent, and is said to be according to DEFRA. I am therefore putting into the public domain information from the Minister's own Department.
	The farm business survey shows that only two sectors are in decline. Dairy is one, and it is down 21 per cent. The situation for the dairy farm is dire. In my part of Devon, dairy farms are mainly family farms. I intervened on the Minister earlier to refer to a couple with bought-in quota. They still own that quota, because they hoped that their son would keep the farm on. He has now gone to live abroad. That is typical of many families in Devon, as the next generation of people look at what their parents went through. They consider the future of farming, and decide that it is not for them. That will have a huge impact on the shape of the countryside, its environment, and our ability to produce our food.
	I have flagged up to the Secretary of State, in response to recent Government papers on agriculture, that there has to be competition and that we need good quality food. We also need to know about food's production standards and origins. However, countries in the single market covered by the CAP should not sign up to policies that would lead to their ability to produce the basic commodity and the finished product being leached away. That would mean that the UK would suck in more of those imports, with all the value added.
	The Government's plan for CAP reform must set out where we can diversify, add value, and make sure that there is sustainability. Farming businesses need to be able to plan. The Minister will be amazed to learn that I am a vice-president of the Devon young farmers club, some of whom are not so young. When I talk to farmers, I am encouraged by the enthusiasm of many young people. They know that they will have to do things differently, but they want to know where the industry is going. They will give up if the direction and planning are not there.
	My plea to the Minister is as follows: will he ensure that the country and the House know what the national plan is? When the Government negotiate at the heart of Europe, we will then have an idea of what the future will be for farmers and for the production of own food.

David Burnside: I start by referring to the Register of Members' Interests, in which I make it clear that I receive an annual rent from my home farm.

Roy Beggs: Will my hon. Friend give way?

David Burnside: Very well.

Roy Beggs: I thank my hon. Friend, but I want to take this opportunity to declare my own interest. Although I will not have time to make a speech, I have made a number of interventions, so I want to draw the attention of hon. Members to my entry in the register.

David Burnside: If we do not look at CAP reform in a much more radical way, we will encounter many problems. We joined the common market in 1970, and the two biggest losers have been the farming industry and the fishing industry.
	I am the son of a farmer, and I remember that the yield on barley was about 40 cwt an acre 20 years ago. Farmers received 120 a tonne in those days, without any subsidy. They now get up to 50 or 55 cwt an acre, and receive about 60 to 70 a tonne, plus a 40 top-up. They cannot cover their costs. At present, milk hovers at around 17p, 18p or 19p, but it costs 17p to produce.
	We have had the wettest winter in history, which has destroyed hay and silage production and increased the cost of feeding during the wet period. I have asked the Secretary of State for Environment, Food and Rural Affairs whether she will press for wet weather aid, but I have had no response. Farmers deserve special wet weather aid.
	International comparisons are always a bit superficial, and I am sure that the Minister will have read the report produced by the Select Committee on Environment, Food and Rural Affairs after our visit to New Zealand, which is often held up as the glowing example of freeing the market. Of course that market was freed after a currency problem in the early 1980s; people did not say, We must free farming. The currency market created a reduction in subsidises across the board in a country with a very different climate and scale of farming.
	The Ulster Farmers Union makes representations to me as the Ulster Unionist farming spokesman, and it is not happy with the deal. We will lose out because of the 340 million reduction between 2006 and 2012. The system will still be semi-subsidised. Farming is in a dreadful state. The pig industry in the United Kingdom is in an absolutely dreadful state. Dairy farmers cannot cover their costs, and no one can make money from barley.
	Fudging around with this type of French-German deal on CAP reform is not in the interests of British farmers. Somewhere along the line, we will have to take hold of Europe by the neck, rather than being at its heart. We will have to take hold of the Commission and get a radical reform in the EU, because British farmers can be efficient.
	We have to alter the scale of farming. I am afraid that we in Northern Ireland have to learn that the 60-acre has to become the 200-acre farm; the 80-cow dairy herd has to become the 250-cow herdthe minimum herd size in New Zealandwith a man and his wife, normally, farming.
	Labour has declined on farms. On my father's family farm, we employed six to seven farm labourersfarm workers, as they are now called20 years ago. In Northern Ireland, 32,000 farms are owned by 22,000 farmers, but there are now only 2,200 farm workers. In New Zealand, farmers can make money for 10 years, sell up and go on holiday, but it is difficult to persuade a son or daughter that it is a good idea to go into farming.
	Farming is a very serious state, and I am afraid that there are not enough votes in fishing and farming for this Government. That is the problem, but it is time we had a radical review of the whole system of support because it is damaging farming. We are just surviving at present. I hope that the disease problemsobviously, foot and mouth and the other diseases that have had a short-term effect on uswill not come back. We are just about hitting our production levels at present, but those in some sectors are going out of business. We need a radical reform of the CAP, not the tweaking at the fringes that is currently being done.

Bill Wiggin: I want to touch on modulation and digressivity. Modulation progressively reduces the rate at which subsidies are paid, and digressivity involves progressively increasing the rate at which modulation is applied to farmers. Comparing the figures for other countries in the EU with the equivalent figures in the United Kingdom shows how disadvantaged this country is, especially given the combined affects of modulation and digressivityit is not an easy word for me to say.
	If we consider the bands in the proposals, we see that only 4 per cent. of UK farms fall into the band of farms that currently receive less than Euro5,000 a year in paymentswhich is approximately 3,300. Farms in that group would not lose out to modulation. A total of 41 per cent. of UK farms come into the Euro5,000 to Euro50,000 band, and a total of 55 per cent. of UK farms are in the overall group receiving more than Euro5,000. By comparison, France receives Euro5.82 billion in direct payments, compared with the UK's Euro3.2 billion. France will do far better than the UK. The figures in the various bands show that France has 7 per cent. in the lowest band, 72 per cent. in the Euro5,000 to Euro50,000 band, but only 21 per cent.as compared with the UK's 55 per cent.in the overall group receiving more than Euro5,000. That is where the cuts will be most swingeing. The average figures for current European Union member countries show 18 per cent. in the bottom band, 57 per cent. in the next band and only 25 per cent. in the overall top group, compared with our 55 per cent. That will make a huge difference.
	The milk quota regime is obstructive and blocks development and expansion in the dairy industry. A Ministry of Agriculture, Fisheries and Food report in 1999 concluded that the quota system hampered efficiency and increased productivity. However, abolishing the regime overnight would not solve the problems. Abolishing the quota system would squeeze all small farms out of business, and small and medium-sized firms would find it increasingly difficult to sell into the bulk market. Individual farmers have little marketing strength. They need to form alliances to influence policy. In particular, investing in the production of their own milk, either individually or as part of a co-operative, would mean that they would have to have more control over the milk price and over the profits between farm gate and store.
	When the proposals of the mid-term review were announced, the shadow Secretary of State, my hon. Friend the Member for Aylesbury (Mr. Lidington), said rightly:
	The CAP is in need of reform. It is right to move to a world where farmers are free to respond to the demands of their customers rather than of governments.
	He also said that, without profitable farming,
	both the wider rural economy and the landscape that we all cherish will suffer.
	The importance of the figures that I read out at the beginning may have escaped the hon. Members who are sitting behind the Minister. Because of the nature and efficiency of UK farms, and because our farmers are the best in the world, we will now be penalised by the change in the regime. That is extremely serious.
	I urge the Government to consider the wording of their own motion, which ends:
	'with the aim of allowing the present quota arrangements to run out after 2006'.
	However, the Minister will know that those arrangements will go on to 2014.
	That cannot be good for Britain. It is especially damaging for our dairy industry, which is the largest part of agricultural production in this country. It is beset by problems such as bovine tuberculosis. That is especially evil because some farmers are dependent on the compensation cheques that they received for having beasts destroyed, and there seems to be no light at the end of the tunnel. The Government have to address the issue of vaccination. I sincerely hope that the Minister will consider that before he comes before the Select Committee.
	I urge the Government to reconsider the wording of their own motion and to ensure that it will be possible for quotas to end in 2006.

Mr. Deputy Speaker: Order. Before I call the hon. Member for Brecon and Radnorshire (Mr. Williams), I ask him to respect the fact that the Minister requires five minutes to wind up the debate.

Roger Williams: I declare my interests in agriculture that appear in the Register of Members' Interests.
	I am pleased to take part in this debate. Agricultural reform and CAP reform have been a continuing process, albeit one that has not been radical enough or fast enough to benefit British consumers or farmers. We have seen the McSharry proposals and Agenda 2000, and now we are going on to decoupling. They have led progressively to less market distortion and have therefore been advantageous to agriculture.
	Many farmers, especially those in the livestock sector, are desperate to escape from the morass of form filling and record keeping. One of them told me that, when the last census was conducted, the Government found that there were several hundred thousand people fewer in Britain than they thought. However, farmers have to keep a record of every single animal that is on their farm, the day it was born, the details of its sire and dam and so on.

Matthew Green: We know more about animals than people.

Roger Williams: Exactly.
	Even the smallest livestock farmer will be involved in a number of support schemes that have different retention periods and retention dates. We need to move away from that, so that farmers can exploit the inherent entrepreneurship and business acumen that systems have so stifled over the past few years.
	I want to say a few quick words about modulation. [Interruption.] I will not go into digressivity as that is a bit too complicated for this time of night. We must have a system of modulation that does Britain more justice. Under the present system, only 3.5 per cent. of the total of modulation money will be returned to Britain, and that has resulted from the reluctance of successive Governments to apply for money for rural development under the second pillar.
	Although I commend the Minister for his bravura performances in the House, I must say that farmers are concerned about the weak role that the Secretary of State has played in looking after our interests in Brussels. For that reason, we will not be able to vote for the Government's motion.

Elliot Morley: With the leave of the House, I note that we have heard contributions from the hon. Member for South Holland and The Deepings (Mr. Hayes), my hon. Friend the Member for Great Yarmouth (Mr. Wright) and the hon. Members for St. Ives (Andrew George), for South Antrim (David Burnside), for Tiverton and Honiton (Mrs. Browning), for Leominster (Mr. Wiggin) and for Brecon and Radnorshire (Mr. Williams).
	I welcome the overall support that we have received for the main thrust of the Commission's proposals. Indeed, there has been almost unanimous agreement on where the weaknesses lie and where there is a need to press harder on the issue of modulation. It disadvantages UK farming and the UK system and, as the hon. Member for South Antrim rightly said, we need to drive forward the move for radical reforms. I am glad to say that my right hon. Friend the Secretary of State has been very much in the vanguard of arguing that case and linking it to the need for change in the Doha agreement.
	I want to correct a couple of points that were made in the debate. The hon. Member for South Holland and The Deepings said that the reference years of 2000 to 2002 were poor years for UK farmers' incomes. That is true but, in future, the reference period that will count for future entitlement relates not to income but to the area farmed or the number of livestock held multiplied by the EU-wide rate. Therefore, UK farmers will not be disadvantaged in relation to net income, because the figure will be linked to what they receive under the EU schemes.
	The hon. Member for St. Ives referred to the projected fall in milk prices of 38.5 per cent. Our economists do not accept that figure; we think that it will be much lower. The predominant effect will be on milk powder prices, which influence world prices.

John Hayes: Will the Minister answer one point about incomes? In response to a comment from my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning), he suggested that 1995 was an unrepresentative year for British farmers. However, he will know that in Finland, Greece, Italy, France, Germany, Austria and Belgium incomes are higher now than they were in 1995. That is the truth of the matter. It may be unrepresentative, but it is undeniable.

Elliot Morley: I would not deny that for a moment. One of the reasons for the increase in farm incomes in those countries is the fact that they are part of the euro. Perhaps this is a bid from a euro supporter in the Opposition for early entry into the euro. However, at the right increase, that would immediately add about 25 per cent. to the bottom line for British farmers. Perhaps he is making an early pitch for a new direction from the Conservative party; that is very interesting.
	Important points were made about bovine tuberculosis. Although that subject falls slightly outside the terms of this debate, it is important. We are financing vaccine research, and I shall be only too pleased to give more details when I appear before the DEFRA Select Committee, which is quite rightly looking into the issue.
	I turn to the questions about compulsory set-aside. The Government are not enthusiastic about compulsory set-aside. It has some nature conservation advantages, but with decoupling and cross compliance the arguments for it are quite weak. We shall take that into account in future discussions on the matter.
	I was also pressed by the hon. Member for Tiverton and Honiton (Mrs. Browning) to say what was the Government's vision. We set out a strategy for agriculture, following on from the farming and food commission. We have also implemented proposals to the England rural development programme, put forward a White Paper on rural development and set up rural forums, all matters which have been widely welcomed as showing the Government's commitment to the countryside.
	In relation to what we have heard from the Opposition, I would repeat that the reason why we receive a pathetic 3.5 per cent of the rural development fund is that in the years of Conservative Governments it reflects a historic
	It being one and a half hours after the commencement of proceedings on the motion, Mr. Deputy Speaker put the Question, pursuant to Standing Order No. 16.

Question put, That the amendment be made:
	The House divided: Ayes 141, Noes 258.

Question accordingly negatived.
	Main Question put:
	The House divided: Ayes 253, Noes 137.

Question accordingly agreed to.
	Resolved,
	That this House takes note of European Union documents No. 10879/02, Commission Communication on the Mid-Term Review of the Common Agricultural Policy, No. 10896/02, Commission working document containing a report on milk quotas and No. COM (03) 23, draft Council Regulations on the reform of the Common Agricultural Policy; supports the Government's objective, to work for a sustainable Common Agricultural Policy which contributes to prosperous rural areas, enhances the natural environment, and provides high-quality, safe food and high animal welfare standards, a fair and competitive environment for farmers and better value for money for taxpayers and consumers; welcomes the European Commission's proposals on reform of the Common Agricultural Policy, in particular the proposals to decouple payments from production, to move from production-linked subsidies to wider agri-environment and rural development measures, and for further market reform, while lessening the adverse impact on trading opportunities to less-developed countries; but regrets that the proposals in several areas did not go further, that they include a complex and potentially unfair mechanism for transferring funds towards agri-environment and rural development measures and, on dairy reform, that they do not meet the requirement of the Berlin agreement that there would be a mid-term review 'with the aim of allowing the present quota arrangements to run out after 2006'.

DELEGATED LEGISLATION

Mr. Deputy Speaker: We now come to motions 6, 7, 8, 9, 10 and 11, which, with the leave of the House, I shall put together.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6)(Standing Committees on Delegated Legislation),

Animals

That the draft Welfare of Farmed Animals (England) (Amendment) Regulations 2003, which were laid before this House on 14th January, be approved.

Agriculture (Miscellaneous Provisions)

That the draft Code of Recommendations for the Welfare of Livestock: Pigs, which was laid before this House on 9th January, be approved.

Northern Ireland

That the draft Strategic Investment and Regeneration of Sites (Northern Ireland) Order 2003, which was laid before this House on 14th January, be approved.

Local Government Finance

That the Local Government Finance (England) Special Grant Report (No. 110) (HC 320) on 200203 Special Grants in connection with Local Public Service Agreements, which was laid before this House on 23rd January, be approved.

Northern Ireland

That the draft Energy (Northern Ireland) Order 2003, which was laid before this House on 23rd January, be approved.

Northern Ireland

That the draft Budget (Northern Ireland) Order 2003, which was laid before this House on 28th January, be approved.[Dan Norris.]
	Question agreed to.

PETITION
	  
	Manchester Airport

George Osborne: I wish to present a petition on behalf of many of my constituents who live in the villages of Plumley, Lower Peaver, Chelford and Lostock Green against the Government's plans to expand Manchester airport.
	The petition states:
	The Petition of the Residents of the villages of Plumley, Lower Peaver, Chelford and Lostock Green declares
	That the villages are being seriously affected by the ever increasing levels of aircraft noise pollution; that the Department for Transport has published projections, which indicate that aircraft movements will increase dramatically in future years and will considerably increase noise pollution in the area; that there is also a proposal to build a third runway and turn Manchester airport into a hub airport larger than Heathrow.
	The Petitioners therefore request that the House of Commons do urge the Secretary of State for Transport to stop the mass expansion plans at Manchester airport.
	And the Petitioners remain, etcetera.
	To lie upon the Table.

HEALTH INEQUALITIES (HEMSWORTH)

Motion made, and Question proposed, That this House do now adjourn.[Dan Norris.]

Jon Trickett: I am grateful to the House authorities for allowing me to lead this short debate. I am pleased that my hon. Friend the Under-Secretary is in her place on the Treasury Bench.
	All sorts of studies over many years deal with health inequality. I was interested to read the Wanless report, which examined premature death in some detail. Derek Wanless used the expression PYLLpotential years of life lost. He suggested that, as a nation, we have not done well historically in relation to our comparator countries. According to the Wanless report, we have the worst record on premature mortality. That is disturbing.
	For example, we are 25 per cent. worse off than Sweden when we compare the potential years of lives lost in both countries. The Government are doing a great deal to tackle the problem through their emphasis on financing, reforming and modernising the health service. However, although the statistic is worrying, there are variations in the nation. A statistic that covers a nation perhaps conceals as much asor more thanit reveals.
	The Wanless report drew our attention to major health inequality in our society. The report states:
	Major killers are linked to socio-economic inequality. The key risk factors are much higher among people in deprived areas.
	Premature mortality is not the only feature of the class system that unfortunately continues to exist to some extent in our society. Limiting, long-standing illness is also prevalent among what Derek Wanless describes as the lower social classes. He does not use that term pejoratively. Of those suffering from limiting, long-standing illness, 32 per cent. are manual workers, whereas only 17 per cent. are in social class 1. The figure for the former category is almost double that of the latter.
	My constituency consists of several mining villages and small towns, where deprivation is a major feature. It is possible to identify the character of my constituency in some detail. The Government produced an index of multiple deprivation, which shows that four wards in Hemsworth constituency are among the most deprived communities. Approximately 50,000 people live in the wards of Featherstone, Hemsworth, South Kirkby, South Elmsall and Upton. Figures for employment, income, housing conditions, literacy and numeracy or any other factor show acute and widespread problems of deprivation.
	As Wanless and many other students of the matter predicted, along with general deprivation goes health deprivation. Sadly, when I examined the deprivation figures relating to my constituency along with the health deprivation figures, the same four wardsmore or less contiguouscontaining 50,000 people proved to be the most health-deprived as well as the most deprived in general. Two of them, Hemsworth and South Kirbyinhabited by probably 25,000 peopleare among the worst 2 per cent. in the country. I doubt that there are many other constituencies, if any, that feature both such acute health deprivation and such a chronic spread across such a large area.
	I do not want to bore the House, but I could produce a string of statistics relating to, for instance, coronary heart disease, mental illness, drug abuse and deaths from cancer. I shall confine myself to some particularly troubling figures relating to premature death from certain illnessestroubling because I find them inexplicable.
	It could be considered predictable for the incidence of lung cancer in a former mining community to be 22 per cent. higher than the national average, although that is a frightening statistic. It is hard to understand, however, why our cervical cancer rate should be 47 per cent. higher than the national average. That suggests that something troubling is happening in the constituency. And why should the figures relating to mental health problems be so high, particularly among women?
	As the local Member of Parliament, I felt very dejected on discovering the high rate of male suicides. An alarming number of young men commit suicide between the ages of 15 and 34. Something must be going badly wrong with communities that were traditionally so strong and stable when they were mining communities.
	In a mining community, respiratory diseases might be expected. What troubles me is that, according to the statistics, the problem is much worse than could ever be imagined. Deaths in Wakefield as a wholeand the problem is particularly acute in my constituencyfrom chronic bronchitis and emphysema are 400 per cent. of the national average. Four times the number of people who would be expected to die from those diseases are dying from them: that is twice the average of 200 per cent. in what is described as the coalfield cluster.Why should women be dying from asthma at 253 per cent. of the national average rate? Women did not work on the ground; they were not exposed to coal dust as the men were.
	No doubt the Minister will want to make some general comments, but I look forward to further correspondence on the specific issues of cervical cancer, suicide rates among young men, the alarmingly high rates of death from chronic bronchitis and emphysema, and female deaths from asthma. I feel that they require some analysis and some understanding.
	It is possible to argue that some of the statisticswhich I think will alarm anyone who looks at themare part of the heritage of the mining industry, and also of the way in which that industry collapsed overnight and the immense social deprivation that followed. I believe that some things at least are beginning to change, and that some hope is being offered. The money that the Chancellor is investing in the health service is starting to feed through, which is welcome.
	The modernisation of the health service is, of course, to be generally welcomed, although I should sound a note of caution. The population that I represent is very sparsely distributed, and not many people have access to cars. In the minds of some, modernisation might mean centralising services so that they are further away. I ask health service managers in my constituency, which is suffering from these particularly acute and chronic problems, not to do that. I fear that there is a sense of drift towards the centre in respect of specialisms, which I would deplore.
	At the same time, the health authority in Wakefield did leave substantial deficits. My noble Friend Lord Lofthouse, who is chairman of the acute trust, and his colleagues are doing everything that they can to reduce that deficit, but I implore the Minister to look carefully at the perhaps overly draconian way in which certain servants of the health service, and of Ministers, are pressing for reductions in the budget. They will be difficult to achieve in the short term, although I am assured that we can achieve them in the long term. The question of whether, given the problems that we face, Wakefield is badly underfunded by the formula is another issue, which I should like the Minister to reflect on in due course.
	There are signs of new hope in the coalfield communities, given the beginnings of economic regenerationfragile though that still is, I am sorry to say. The money that the Government have made available through the single regeneration budget and other special exercises is beginning to feed through into the coalfield communities. The Government's intention to tackle child poverty is a major step forward, as is the statutory minimum wage. All of those measureswhich attempt to tackle inequalities, and in particular the most acute deprivationare beginning to feed through and to bring some hope to our communities. However, those who, like me, live among mining communities that continue to collapsein fact, they are implodingwould have to say that in some areas the hope of regeneration remains extremely fragile. I encourage the Government to do everything that they can to help with the regeneration of coalfield communities.
	I know that the Deputy Prime Minister secured from the Chancellor a very large sum of money to help coalfield communities, which was made available to the Coalfields Regeneration Trust. The CRT understands the extent of the health problems in constituencies formerly based on coal mining, and I have discussed with its chief executive and officials on many occasions the problems that we face. The chief executive has said that, on the CRT's behalf, he would like to make a strategic intervention in the health of the Hemsworth constituency, which he acknowledges constitutes a particularly serious problem. In fact, he has described Hemsworth as a black hole that funding has yet to penetrate. The CRT has accepted that health should be one of its key ways of alleviating the problems in coalfield communities, but it has yet to find the possible solutions to some of the health problems that I briefly described.
	On re-reading the Wanless report, it becomes clear that many of the factors that produce acute ill health, especially among manual workers and deprived communities, are susceptible to changes in behaviour. Smoking, obesity and lack of exercise are all factors that can be found in the communities that I represent. However, Wanless also says that a public health agenda always seems to come down to what we might loosely describe as the middle class. Often, it is the most deprived communities that are more resistant to the public health message and to changes in behaviour that might bring about some improvement in health conditions in the medium term. The Government need to be more imaginative in ensuring that their message is understood so that change can come about in deprived communities such as those that I described.
	I want to suggest a partial solution. Many of the people whom I represent have a particular interest in sport and exercise so, rather than trying to reach people through television advertisements or literature that they may not notice, we should use things in which they are interested as motivating factors. I am fascinated by the Department of Health's physical activity pilots. We are putting together an exciting and innovative pilot that will involve local general practitioners and the primary care trust. There will probably be between 60,000 and 70,000 from the private sector and a large amount has been promised by the Coalfields Regeneration Trust, as a strategic intervention.
	We are still at the bidding stage. I realise that my hon. Friend the Minister has to treat all applications equally, but I hope that she will consider our application, which has several innovative features, and respond to it. Some of the best private sector practitioners are involved, spearheaded by the Fitness Industry Association, which has indicated that it will make available equipment and specialised coaching.
	My vision is to create the partial regeneration of the health of the community by latching on to people's interest in sport and exercise. We already have some facilities, provided from lottery funding and supported by mainstream Government funding. They will be well used. We have some innovative general practitioners who are more than keen to work on physical activity pilots and the GP referral schemes, with which my hon. Friend is probably more familiar than I am. I encourage her to look into those schemes.
	I wanted to draw the attention of the House to communities that were formerly powerful and strong and which created the wealth of this country through the coal mining industry. The country depended on such communities but they have been left derelict. I shall not go into the partisan reasons for that. Villages continue to die. People are still dying from the effects of the coal industry and from the deprivation in their communities. On average, people born in the UK may live for a shorter time than people in comparator countries, but the life expectancy of people born in Hemsworth is substantially less than average. As the MP for the area, I am sorry to have to say that.
	We need to tackle the problems intelligently, rationally and urgently. I hope that my hon. Friend the Minister understands our problems and the depth of the health crisis that faces my constituency. I realise that she has a full diary, but I invite her to visit my constituency to look at our physical activity pilot and to tell us what she can do to help to alleviate the problems. Although it may be beyond her brief, will she ask her ministerial colleagues to consider the funding for Wakefield health authority? We are doing everything possible to correct the financial crisis; much effort and time is being devoted to solve that problem. However, I want the health services to be fully engaged in alleviating the health problems from which my communities suffer so badly.

Hazel Blears: I congratulate my hon. Friend the Member for Hemsworth (Jon Trickett) on securing the debate, and welcome the opportunity to respond to the points that he has made. He painted a graphic picture of the problems that his constituents face, and he is right to make us aware of them.
	Health inequalities are avoidable; they are fundamentally unfair and the whole Government are committed to tackling them. This matter is not just for the Department of Health; it involves everyone in the Government. It involves housing, transport, the environment, employment and all the issues that my hon. Friend highlighted. There are good personal, social and economic arguments for improving the nation's health. Good health is fundamental to communities. It is good that people in general are living longer since the advent of the national health service, but progress is not the same for everyone and there are still too many dramatic inequalities. The blunt truth is that in the Wakefield local authority area, life expectancy at birth is 74.6 years for men and 79.4 years for womenwhich does not compare well with Chelsea and Kensington and Dorset, where people enjoy much better life expectancies. Men and women in my hon. Friend's area live within the 20 per cent. of local authority areas where life expectancy is shortest.
	Reducing health inequalities is a big challenge for any Government. We have not just described health inequalities; we have taken action and are determined to make a difference. Almost one of the first things that we did in government was to institute the Acheson inquiry into the extent of health inequalities and to gather evidence about their causes and the effectiveness of possible solutions and remedies in trying to close the enormous health inequalities gap.
	Sir Donald found that inequalities in health status ranged across geographical areas, social class, gender and ethnicityand that many of those differences had widened over the previous 20 years. Such a picture, he said, highlighted the need for the Government to act on a very broad front.
	The findings of that inquiry have helped drive our work within the NHS and across government. Action on inequalities featured strongly in the NHS plan. In February 2001, we announced the first-ever national targets to reduce the health gap in life expectancy and infant mortality. We have tried to approach the problem right across government, looking at action on poverty, education, employment, housing, environment and transport.
	My hon. Friend was right to highlight the biggest killers. There are inequalities in relation to cancer and coronary heart disease in terms of excess deaths and inequity of access to basic health services. We are trying to target specific help for key risk factors, launching the most ambitious programme ever to tackle smoking in the UK. Every primary care trust now offers world-class smoking cessation services. Since April 2001, nicotine replacement therapy has been available on prescription to help people to stop smoking. The cancer plan has ambitious targets to reduce smoking among manual groups from 32 to 26 per cent. by 2010, which will have a significant impact on excess deaths from cancer and coronary heart disease.
	Diet is also important. The national school fruit scheme represents the most ambitious and dramatic programme to improve child nutrition since the second world war. By the end of July, 1 million children will receive a free piece of fruit each school day. The new opportunities fund will provide 42 million to scale up that scheme over the next two years, and from 2004 every four to six-year-old will be eligible for a free piece of fruit each school day. We are also beginning to trial free carrots and tomatoes, which I understand are going down extremely well in pilot areas. The five-a-day community pilot initiatives will try to improve affordability and access to fruit and vegetables, particularly in disadvantaged communities. That scheme will be supported by 10 million from the new opportunities fund over the next two years.
	I know from a previous Adjournment debate and my hon. Friend's comments tonight that he has a real interest in exercise referral schemes. There is substantial evidence to support the role of physical activity in promoting good health. The LEAP programme, jointly funded by the Department of Health and national partners, aims at testing different evidence-based community approaches to increasing the numbers of adults and children in deprived areas who take regular, moderate-intensity physical activity. Some 36 primary care trusts have submitted formal bids to nine regional panels. My hon. Friend highlighted the bid from his area with the support of the Coalfields Regeneration Trust and other partners. Those bids are being examined and the nine successful pilotsone in each public health regionwill be announced in early March. I certainly undertake to consider all the submissions carefully, including the scheme in my hon. Friend's area.
	We must try to act nationally as well as locally when tackling health inequalities. The Government are doing a great deal, through the national minimum wage and the various tax credits, to increase family incomes and improve education. For example, the sure start programme gives children and young families a decent start in life, and the national strategy for neighbourhood renewal has regeneration programmes through single regeneration budgets. We also have the new deal for communities.
	We have now had the cross-cutting spending review on health inequalities, with every Department lined up to tackle the problems together. Indeed, the spending review settlements are partly predicated on Departments' contribution to combating health inequalities. It will be interesting to see what each Department can do.
	My hon. Friend will be aware that over the next three years the allocation made to Eastern Wakefield PCT will grow by more than 32 per cent. That is a significant level of investment and it should deliver real benefits and results. I know that the allocation still falls short of the target, but the significant investment will help to tackle the health inequalities that he mentioned.
	The NHS in the Hemsworth area is part of a regional initiative to ensure that both the capital investment and revenue spending by the NHS achieves maximum value. That includes employing local people and procuring goods locally to regenerate the local economy at the same time as providing health services. That work is supported by the regional development agency, Yorkshire Forward. That innovative approach to spending NHS money will improve not only people's health but their chances of employment to bring hope back to the coalfield communities about which my hon. Friend spoke so eloquently.
	Through Shifting the Balance of Power, we are trying to put the vast majority of the NHS's budget into the PCTs on the front line, so that they can do what is important to local communities. The Eastern Wakefield PCT, which covers my hon. Friend's constituency, has been very proactive in the area of public health and has a very good record. It works closely with the local strategic partnership. The Hemsworth Partnership has a range of initiatives, including a public health road show in November, which was attended by more than 1,000 people. The event focused on issues such as diet and exercise, smoking, sexual health, teenage pregnancy and domestic violence. Those issues are important to all my hon. Friend's constituents, and a similar road show is planned for this year to heighten awareness further.
	The West End Project is involved in the regeneration of former pit houses and an environmental clean up of the area. My hon. Friend mentioned the problem of substance misuse in the area. I know that the Wakefield Accord is a mentoring, advice and employment service for people affected by substance misuse. The area also has GASPED, a support service for the parents of drug misuserssomething that is not always at the forefront of provision. The outreach service known as the Hemsworth van goes out into communities to try to support people there. The health action zone has provided a good foundation for the whole prevention agenda, including the Hemsworth parenting project, the integrated family centre in South Elmsall, and the promoting positive health project, which is also based in Hemsworth.
	Much is being done, but it is clear that there is much more to do. My hon. Friend highlighted some deeply troubling statistics on coronary heart disease, cancer, mental health and suicide. I am happy to enter into further discussion with him to see how we can discover the underlying causes for those problems in his community. I am also more than happy to continue to work with him to support local people as they start to take control of the agenda and begin to feel more empowered in looking after their own health.
	My hon. Friend mentioned the important issue of long-term chronic diseases in his area and the difference between the social classes. He will be interested in the expert patients programme, which helps people with chronic diseases to become experts in their own care and partners in improving their health. Ensuring that local people are in charge of that agenda is key to its success.
	We are also pressing on with the improvement of primary care facilities, with the local improvement finance trustor LIFTproject starting to refurbish primary care in areas such as Hemsworth. The personal medical service pilot scheme will also provide better GP services.
	Tackling health inequalities is a long-term programme that is a top priority across government. Poorer people get sick more often and die sooner than the better off. It is as simple as that. We are determined to close the gap so that everyone, whatever their background or class, has the chance to live a longer and healthier life in the future.
	Question put and agreed to.
	Adjourned accordingly at fifteen minutes past Nine o'clock.